Life insurance conversion is an option to make your temporary term policy a permanent policy that you own as an asset.
Term life insurance makes sense for many of us. Specifically, this coverage option provides low-cost protection to the loved ones who would be affected by the loss of your income and other household contributions.
But what happens if you’re approaching the end of the preset term period with less financial security than you thought you’d have by now?
Find out more about life insurance conversion and how to help keep your family safe:
When does converting your policy make sense?
Medical bills, a job loss and other circumstances sometimes limit wealth accumulation. One solution — converting your term policy to whole life — might be within reach if your timing is right.
How does a conversion work?
Most term policies provide a window to convert before your term expires or before you reach a certain age. You typically won’t have to qualify medically, which may get you a lower rate on whole life.
What are some of the long-term benefits of converting your term policy?
A whole life policy lasts for your entire life (as long as you pay the premiums), allowing you to leave money to heirs or charity. Whole life can also support a lifelong dependent, such as a sick or disabled child or spouse. It can also be a tool for mitigating estate taxes.
You may also borrow against the accumulated cash value of a whole life policy. Just note that policy loans accrue interest, and loans outstanding at death reduce the policy’s death benefit.
What else should you know?
Whole life tends to be more expensive than term because of the additional policy benefits and guaranteed payout. Partial conversion can be a more affordable option.
Have questions? Please reach out to discuss your options if you’re concerned your term policy may be too short.