Term vs. Whole Life Insurance

Can I convert my term life insurance to a permanent life insurance policy?

You may have a term life insurance policy and may be nearing the end of the term. As you reach the end of the term a whole life/long-term policy might be a fit.  Some term policies can be converted to whole life insurance policies before the end of the policy term. And can be done without having to rewrite a new policy, without evidence of insurability and without a medical exam.

Term vs. Whole Life

With a term policy, the proposed insured chooses a time frame usually between 5 years to 30 years that they want coverage. They pay their premiums until the end of the term. And if they die during the contract term the beneficiary will receive the death benefit. If you outlive your term policy the premiums paid are kept by the life insurance company.

A whole life policy is a permanent life insurance policy that does not expire if you pay your premiums. You pay the same premium amount until you pass away. Over time the policy builds cash value which is accessible while you are still alive. 

Can all term policies be converted into whole life policies?

Each life insurance policy is different. Some have will have a conversion privilege built into the contract. Others may require you to buy a conversion rider. Some may not have a conversion option at all. It is important to discuss the specifics of your life insurance contract prior to purchase. And if the policy is already in place and you are not sure, call and confirm so you can plan. In one example, you could be in the final year of your term policy and find out you are terminally ill. If the policy is convertible, you can possibly move the whole policy to whole life and do so without doing a medical exam. Keeping your insurance in place for when you really need it. 

Also, you can plan how much permanent insurance you want for when the term policy expires. For example, you may have a 500k 20-year term policy. And would like to have $75k-100k of permanent insurance in force past the term expiration. Having a conversion option can help you convert parts of the term to permanent insurance during the term period right up until the end of the contract. 

How do I convert my term life insurance policy?

-Determine if your term policy has the option to convert

-Talk to your insurance agent to learn what types of permanent insurance are available and 

the cost

-Fill out the conversion application

-Choose the amount of term insurance you would like to convert to whole life insurance

-Confirm the billing frequency (monthly, quarterly, etc.)

-Review beneficiaries

*(any changes to a life insurance policy creates an opportunity to review in force 

beneficiaries)

As always, if you have any questions don’t hesitate to sit down with a licensed insurance professional to navigate through all your options.