Co-Founder, Coastal Financial Partners Group, California
Term life insurance that features a convertible provision can be converted to a permanent life insurance product at the same insurer. The terms of the feature will be specific to your policy.
Many convertible term products allow for conversions to occur, without evidence of insurability, during the less of the initial level term period or age 65. This varies widely though by insurer and product.
Also note that some insurers limit the choice of the permanent product to ones selected by them, rather than your choice from their current product portfolio.
Yes, Term life insurance can be converted to Whole life or some other form of permanent insurance if: 1) The policy you got has the option to be converted, 2) you convert it within the time frame noted, and 3) you can afford the premium for the converted policy.
While a life insurance company may carry many types of permanent coverage, they do not always offer all of them to be used for conversions. Some companies only allow a term policy to be converted to one or two permanent policies, and those may not have all the guarantees or features that you might have chosen if the whole array of permanent products was available to you.
Also, the permanent policy will be priced at the rates of that time, and at the age the insured person is at the time of conversion You can reduce the face amount to the minimum allowed for that permanent policy, but even $50,000 or $100,000 can be costly at an older age and for a permanent product.
That being said, being able to convert a Term policy to Whole life or Universal life is a great feature, especially if someone has had a downturn in health after getting their initial Term insurance. There are no health requirements to convert Term life insurance, and the health rating for the converted policy will be the same as it was for the original Term policy.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Can term insurance be converted to whole life (or permanent coverage)? Only if it is a term policy with that provision. NOT every term policy is convertible. It can be a HUGE mistake to purchase a term policy without this feature. The conversion option is a person's safety net if they find that they still need coverage beyond the period they bought the term coverage for AND no longer have the best health.
The nice thing about the conversion option is it allows you to purchase a new policy at your old health condition. So if you were a healthy young person when you purchased the term policy, the insurance company keeps you as a healthy person rate, rather than what you might actually be.
Not all term life insurance policies are created equal. You must confirm that the policy allows for conversions to a permanent policy and the length of time the policy allows you to convert. Keep in mind that the life insurance company may limit their permanent life insurance policies to designated contracts and not their full inventory. Unfortunately many permanent products are not competitive, so it’s very important in your purchasing decision for term life insurance to also consider the company’s permanent product inventory in the event that you need to convert.
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Many convertible term products allow for conversions to occur, without evidence of insurability, during the less of the initial level term period or age 65. This varies widely though by insurer and product.
Also note that some insurers limit the choice of the permanent product to ones selected by them, rather than your choice from their current product portfolio.
While a life insurance company may carry many types of permanent coverage, they do not always offer all of them to be used for conversions. Some companies only allow a term policy to be converted to one or two permanent policies, and those may not have all the guarantees or features that you might have chosen if the whole array of permanent products was available to you.
Also, the permanent policy will be priced at the rates of that time, and at the age the insured person is at the time of conversion You can reduce the face amount to the minimum allowed for that permanent policy, but even $50,000 or $100,000 can be costly at an older age and for a permanent product.
That being said, being able to convert a Term policy to Whole life or Universal life is a great feature, especially if someone has had a downturn in health after getting their initial Term insurance. There are no health requirements to convert Term life insurance, and the health rating for the converted policy will be the same as it was for the original Term policy.
The nice thing about the conversion option is it allows you to purchase a new policy at your old health condition. So if you were a healthy young person when you purchased the term policy, the insurance company keeps you as a healthy person rate, rather than what you might actually be.