Conversion of Term Life Insurance

Most term life insurance companies have a conversion option, or extension option, built into their policies. Conversion of term life insurance is the option to extend the term policy beyond the guaranteed level premium term period (10 year, 15 year, 20 year, 30 year, etc) at a new level premium without requiring you to provide new evidence of continued good health.

Conversion is built into almost every term policy, so you don’t pay extra for it. 

Get Longer Coverage at Great Rate Even If You Have Health Issues

If you originally qualified for a “Preferred Plus” rate, some insurance companies will allow to extend your coverage at a “Preferred Plus” rate regardless of your health at the time you want to convert.

Conversion is a great option if you have had a negative change in your health since you purchased your term policy, and you do want any portion of your life insurance for longer than the original level premium term period that you chose.

The ideal term insurance policy to purchase is one that is convertible for the full 10, 15, 20, 25 or 30 year level premium term period. This way, even if you get to the very end of your term, you still have an option to continue any portion of your life insurance regardless of your health at that time.

Some Term Companies Offer Terrible Conversion Option

Some term life insurance policies are only convertible for the first 5 or 10 years, which is not good. 

Some insurance companies have also limitations on what products they’ll allow you to convert too.

Ideally, you want your term policy to be convertible for the full guaranteed level term period and you want your policy to be convertible to any permanent product that the insurance company offers.

Some of the insurance companies with the best conversion options right now are American National Life, Columbus Life, John Hancock (with extended conversion rider only), North American Company for Life & Health, Ohio National Life (Plus product only), Penn Mutual, Principal Life, Prudential and United of Omaha.  

What Does It Cost To Convert

The cost to convert any term policy will depend on your age at the time you decide to convert, the total amount of life insurance that you want to convert and how long you want the insurance to continue.

You do not have to convert your entire amount of life insurance. Most insurance companies will allow you to convert any portion of your life insurance up to the total amount you currently have in force, with the minimum amount to convert usually being $25,000 or $50,000.

Reducing the amount of insurance that you convert will reduce the cost of the converted policy. 

Even though you can only “convert” to permanent insurance products, you can still usually convert to a shorter duration universal life policy with many insurance companies.   This option will usually be much less expensive than converting to “lifetime” or whole life product. 

For people whose health remains good, it will usually be more cost effective for them to re-apply for new life insurance as opposed to converting their existing term policy.

Cheapest Term Life Insurance Is Not Always Best

Many people don’t understand the importance of having a good conversion option or they only focus on getting the absolute lowest term rate when they initially purchase, even though a term plan with better conversion option may only cost a few dollars more.

We have helped thousands of people convert their life insurance policies who could no longer qualify for life insurance or who will only qualify for unaffordable new rates due to having health issues.

We specialize in getting life insurance for people with health issues and it is a rare occurrence when we cannot find coverage for most people.

For those people who have existing term policies and who may not be insurable or who have health issues which will cause them to be charged too much for new life insurance, conversion is an excellent option.

Term Life Needs To Be Convertible To Be Sold Via Life Settlement

Another important issue regarding conversion is if you ever wanted to try to sell your term policy via a Life Settlement someday, term policies must still be convertible to be sold.

Please contact us at 1-800-380-3533 if you’d like us to get you information about converting your term policy or just send an email indicating you would like to convert your policy and we will help you.  

Add Comment

Your email address will not be published. Required fields are marked *