So, you did the right thing by getting a term life insurance policy to help protect your loved ones financially if something were to happen to you. However, as your life progresses, converting your life insurance policy is something that you may consider.
Converting your policy means that during a specified period of time you can change all or part of your term life insurance policy to a permanent policy for the same amount of coverage, without having to provide evidence of insurability. Having a permanent policy means that your coverage will not end, as long as you continue to pay the required premium, plus you’ll have the added benefit of its cash-accumulation feature. Keep in mind that because of these added features, your permanent life insurance premiums may be more costly than your term life premiums.
Check your current policy to see if conversion is an option that is available to you. Many policies have a conversion feature available, so you may not even remember that it’s a part of your coverage. With other policies, it’s added as a rider, at an additional cost. In addition, there is usually a set period of time in which you can convert your policy, along with a maximum age, usually 65. The bottom line: Check your policy, as it may contain the conversion details you need to know.
Once you have confirmed that conversion is possible, here are three reasons you may want to consider converting your policy:
1. Your health has changed and you still have a need for coverage. When you purchased your policy, the end of the term probably seemed a long way off. Now that it’s approaching, your life may be very different than you’d imagined. You may still have financial obligations—a mortgage to finish paying off and kids still in school—that you thought wouldn’t still be a factor.
If this is coupled with the fact that your health isn’t what it was, converting your policy may make sense. Because life insurance rates are dependent on current age and health, a chronic illness or a recent struggle with cancer, for example, may make getting a new policy too expensive or even impossible to get. When you convert your current policy, you don’t have to provide evidence of insurability.
2. You’re older and interested in covering your retirement years. You may want to have coverage that would take care of your spouse or partner well into retirement. Many of us are still rebuilding our nest egg after the Great Recession. Having a permanent policy in place while you do that means your significant other can have less worry if something happens to you before you’ve met that goal.
3. You can now afford permanent coverage and want to take advantage of its benefits. You may have initially purchased term life insurance when you had a limited income, but a big need for coverage—like when your kids were just born. Now, however, you may be in the financial position to afford permanent coverage, which will give you lifelong protection and the ability to access the cash accumulation down the road. If you are young and in good health you may be able to qualify for a new permanent policy at competitive rates.
Examining your existing policy and weighing the benefits of converting it is something an insurance professional is trained to do and will be happy to help you with. Don’t let unanswered questions stop you from getting or maintaining the coverage you need.
At any stage in life – if anyone depends on you – there is a good chance that you need life insurance.
Life insurance can be used to help charities that are close to our hearts.