Term life insurance is popular because it allows the consumer to purchase a higher death benefit at a lower price than permanent life insurance, such as whole life and universal life. As the name implies, term insurance provides protection for a specific and limited amount of time.
So, what can you do when you realize you need all or a portion of your life insurance to last beyond the initial length of your term?
Most term policies include a conversion privilege: a contractual right to exchange all or part of the term policy for a permanent policy without having to prove insurability. You do not have to wait until the initial term period expires to exercise this right.
Appealing, but what does it mean to me? It means that any time after the first policy year, you can change from a limited-time benefit to a permanent one without answering health questions, having bloodwork or any other physical examination. In most cases, the death benefit for the new permanent policy will be in force until age 121, providing you with lifelong coverage.
WHY CONVERT A POLICY?
There are many reasons a person may choose to convert a term policy.
- COST – Cost can be a deciding factor when purchasing the initial term policy. The desire for lifelong protection exists, but the insured may be unable to afford the higher price of a permanent policy. Once sufficient funds become available, conversion allows the insured to purchase lifelong coverage.
- CHANGE IN CONDITIONS – The insured’s needs changed and he or she needs to extend the amount of time the policy is in force. Not having to prove insurability eases the process and gives the insured peace of mind.
- PART OF THE PLAN – Conversion may have been part of the original plan. Some insureds consider the availability of conversion when making their initial purchase.
Whatever the reason, conversion is a convenient way to make the most out of your current term life insurance policy. Talk to your local, independent agent today to see if converting your term policy is the right move for you.
For policy service and additional information, speak to Landmark Risk Management & Insurance representing The Cincinnati Life Insurance Company. For a complete statement of coverages and exclusions, please see the policy contract. All applicants are subject to underwriting approval. Products and riders available in most states.