Today, we're diving into a type of life insurance called convertible term life insurance. This type of insurance can help offer both flexibility and security as your life evolves. It provides you with an option to convert it into a permanent life insurance without having to undergo a medical exam or provide any further evidence of insurability. Increases in coverage are subject to new underwriting. Whether you're just starting out in your career or entering a new phase of life, understanding how convertible term life insurance works could be key to your financial planning.
Convertible term starts off as a regular term life policy, which means it covers you for a specific period say, 10, 20, or 30 years with a fixed premium and a set death benefit.
One feature of convertible term life insurance lies in its conversion feature. Depending on the policy, you may be able to convert your term policy into a permanent one during a specific period or up until a certain age. This is incredibly valuable if your health has declined since you first bought the policy because you won't need to pass a medical exam to qualify for the new coverage.
Why might you consider convertible term life insurance? Here are a few benefits it can help with. Flexibility: It adapts to your changing life circumstances, allowing you to switch to a permanent policy when your financial or family needs become more long-term. Security: It ensures that you can have lifelong coverage as long as premiums are paid even if your health status changes, protecting your insurability. And cash value. Converting to a permanent policy means you can start building cash value that grows over time, which can be an asset for future financial needs.
Choosing convertible term life insurance sounds great, but there are some things to consider: Premium changes. When you convert, your premiums will increase, reflecting the permanent nature of the new policy and your older age at conversion. Timing of Conversion: Policies have deadlines for when conversion must occur. Make sure you know these dates so you don't miss your opportunity. And lastly, not all term policies have the same conversion options. Some may allow you to convert to any permanent policy offered by the insurer, while others may limit your choices.
Is convertible term life insurance right for you? If you anticipate needing life insurance beyond the term of your current policy, especially if you might not qualify for new coverage based on your health, then this could be the choice for you. If you are starting out and need affordable coverage now but want the option for more comprehensive coverage later.
Thanks for watching our deep dive into convertible term life insurance! We hope this video helps you understand how this type of works and whether it fits into your life plan.
