What are Term Life Insurance Conversions?

Life Insurance

Congratulations! You have purchased a term life insurance policy in order to protect your family’s financial future. Did you know that most of our carriers have an option available that is called the term conversion option? When you purchase your term life insurance policy; you may have the option to be able to convert the term policy to a permanent policy without any medical underwriting.

You’re probably saying, what does this mean? There are two types of policies that you can purchase, one is term insurance where the price would be locked in for a specific time period such as 10, 15, 20 or maximum of 30 years. The second type is permanent life insurance that would lock in the price for the rest of your life. Many times the term life insurance is purchased as the pricing can be lower as you are not locking in the price for your lifetime.

The term conversion option allows you to decide later to change from a term policy to a permanent policy. Typically, carriers that offer this require you to exercise this option prior to your policy ending or age 70 whichever comes first – their rules vary though, be certain to understand your carrier’s the rules when applying. If you choose to convert to a permanent policy, the carrier would issue the policy based on your age at time of converting, but they would not require any underwriting. You can convert up to the amount of life insurance that you currently have but not more or you would have to undergo an underwriting approval process. Remember, this means there would not be any medical records or labs results required. The term conversion option is often exercised when a person’s health has changed (generally deteriorating) and they might not be able to get new coverage after the term period ends.

About the author: Pam Fortier has been in the life insurance business for over 30 years. She also holds both a LUTCF designation and a CISR designation. Pam is adept at helping clients select the coverage they want at the price they can afford. You can contact Pam at 1-800-651-1953 or PFortier@Pivot.com.