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Convertible Term Life Insurance

A convertible term life insurance policy can help you keep your options open. Learn how it works and when it might make sense for your needs.

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What Is Convertible Term Life Insurance?

A convertible term policy starts out like a regular term life insurance policy. It's temporary life insurance coverage with a set expiration date, such as 10, 15, 20 or 30 years. If you die within the coverage period, the policy will pay out the death benefit to your beneficiaries. If you outlive the coverage period, your coverage ends.

However, convertible term policies have an extra feature that lets you switch some (or all) of your coverage to permanent life insurance — coverage that could last your entire life and build cash value, as long as premiums are paid. More importantly, you wouldn't need to pass a health exam to make the conversion. Increases in coverage could be subject to new underwriting.

What Are the Benefits of Convertible Term Life Insurance?

Your Options Are Open

Convertible term life insurance might make sense for someone who wants term life insurance now but might want permanent coverage in the future.

Let's say you're a 20-something looking to buy your first life insurance policy. You may like the idea of permanent coverage, but you may only be able to afford term life insurance. With a convertible term policy, you can switch to permanent life insurance when you're ready — with no health exam.

Less Worry About Changes in Health

This policy type may also be useful for someone who's worried about losing their coverage because of health problems.

Let's say you're in your 40s and want a 10-year term life policy. Maybe you've qualified for a health discount. You're not sure if you'll still want coverage in 10 years, but you'd like to keep your options open. By choosing a convertible term policy, you could extend your coverage later — even if you develop health issues.

Coverage that Fits Your Plans

A convertible term policy may be useful for someone who wants to continue their coverage. Some people purchase term life insurance policies for coverage until retirement. But many also realize they would still like coverage once their terms expire. Convertible term policies allow people to switch to permanent coverage options when the time comes.

How Does Convertible Term Insurance Work?

One of the primary benefits of convertible term life insurance is that it can help keep your options open. While a term life policy may be the right fit for you today, years later you may want to switch to permanent life insurance coverage. But your future state of health may prevent this switch. With convertible term life insurance, you don't have to worry about tomorrow.

  • Extend Coverage: A convertible term policy also lets you extend your coverage as it gets close to expiring. You can convert at any point while your term life policy is still active — even a few days before the expiration date, depending on the policy. Some companies will also let you convert partial amounts, so you don't have to convert your entire term life policy.
  • Premiums Change: Your premium will probably increase when you convert your policy because you're switching to permanent coverage. Permanent life insurance generally costs more than term life insurance because it never expires — so long as you keep paying the premiums. The insurance company bases the price of your new permanent coverage on how old you are when you convert.

The good news is the company will keep your health rating the same. If you qualified for a health discount before, you'd keep that discount on your new permanent policy after the conversion, even if you develop health issues.

Learn About Western & Southern’s Convertible Term Insurance

Simple Choice Guaranteed Level Term

  • Premiums guaranteed to stay the same for the entire coverage term you choose, regardless of your health.
  • You can select coverage terms of 10, 15, 20 or 30 years.
  • After the initial coverage period, you can renew your coverage annually at an increasing premium scale. Once the policy has renewed to annual renewal term rates, no conversion is allowed.
  • If your needs change, it is easy to convert to a permanent whole life or flexible premium insurance plan.

Simple Choice Term Brochure (PDF)

Income Choice Term

  • Choose a lump-sum death benefit amount payable upon your death in addition to future income payments.
  • Provide income to your loved ones for 10 years or up to 30 years.
  • Income payments can be $100 or greater.
  • If your needs change, it is easy to convert to a permanent whole life or flexible premium insurance plan.
Income Choice Term Brochure (PDF)
Income Choice Term Video

 

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Frequently Asked Questions

Does converting my policy cost extra?
An insurance company may charge an extra fee for adding the convertibility feature, but this depends on the company. You may be paying more for a feature you may not use and will need to decide if the added flexibility is worth the cost.

Can I convert my permanent policy back to a term policy?
Once you convert your coverage from term to permanent, you can't reverse the decision. If you realize the price of permanent is too much for your budget, you would need to buy a new policy to switch back to term, which may also mean passing a health exam.

What if I qualify for a lower term rate later on?
If your health improves or you quit smoking after you buy a term policy, you may qualify for a lower rate by reapplying and going through the health exam again. A financial representative can help you decide on the best plan of action. By making your term convertible, you could avoid gambling your life insurance coverage on a future health exam. It's entirely up to you whether you want to extend your coverage later.
IMPORTANT DISCLOSURES

Individual Term Life Policy Series ICC18 1801-307 WSA issued by Western-Southern Life Assurance Company, Cincinnati, Ohio, which operates in DC and all states except NY.

The Income Choice Term product ICC20 2008-2627 is available as an option under the Simple Choice Term product ICC18 1801-307 by selecting one of the period certain guaranteed payment options. Should an alternate payment option be selected, the client will receive the Simple Choice Term product. Product features, rider availability and benefit provisions vary by state. Availability is also subject to underwriting. The policies and riders offered contain exclusions, limitations, reductions of benefits, and specific requirements for keeping them in force. Payment of benefits under the life insurance policy is the obligation of, and is guaranteed by, Western-Southern Life Assurance Company, Cincinnati, Ohio, which operates in DC and all states except NY. Guarantees are based on the claims-paying ability of the issuing company. Western & Southern Life is the marketing name for Western-Southern Life Assurance Company. Individual Term Life Policy Series ICC18 1801-307 WSA. Endorsement series ICC20 2008-2627 WSA END.

These policies and benefits may not be available in all states, and benefits may vary by state.

Life insurance policies contain certain exclusions, limitations, reductions of benefits and terms for keeping them in force. Please contact a financial representative for complete details.