In fact, the underwriting class you were assigned when you bought your term policy (standard, preferred or super preferred) won’t change even if your health has changed. You won’t have to take a life insurance medical exam or go through the underwriting process, says Dane Spealman, a State Farm insurance agent in Pikeville, Maryland. Then contact your insurance agent or company to ask to convert your policy. “If you know when that deadline is, you want to be sure you can make the conversion before the period expires,” he says. For example, the conversion period on a 20-year term policy might be limited to the first 10 years the policy is in force. But many will limit the conversion period, says Henry Hoang, founder of Bright Wealth Advisors and Bright Life Insurance in California. Some companies will allow policyholders to convert at any point during the term of their policy. Next, check the term conversion period-the time frame during which you can convert. First, check the language of your policy to see if conversion is an option (it is on most policies).
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How to Convert Term Life to Permanent LifeĬonverting a term life policy to a permanent policy is much simpler than applying for a new policy. Here’s what you need to know about how and why to convert term life to permanent life insurance. Making the switch is easy, but deciding whether it’s the right move isn’t that simple. Term life insurance policies typically offer the option to convert them into permanent life insurance policies. Does that mean you have to go back to square one and get a new policy? Not necessarily. You might even decide that what you really want is coverage that lasts a lifetime. You might later find that the term length of your life insurance policy isn’t long enough to meet your needs. “Term insurance is a good fit for a lot of situations and covers most people.”īut goals can change.
“If the goal is to protect you while you’re building a nest egg, term insurance is a great choice,” says Dennis LaVoy, a Certified Financial Planner, Chartered Life Underwriter and founder of Telos Financial in Michigan. If you choose the right term length, the coverage will be in force during the most crucial financial years for your family-for example, up until the point your mortgage is paid off or your kids have made it through college. It’s also cheaper because term life insurance doesn’t have the cash value or internal policy charges that many permanent life insurance policies have. It costs less than permanent life insurance because it provides coverage for a limited number of years rather than indefinitely. Term life insurance often is touted as an affordable way to provide a financial safety net for loved ones who count on you for support.