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 original guaranteed level premium term period (i.e. 10 to 40 years)
You can automatically convert at a new level premium without requiring you to provide any new evidence of continued good health.
Conversion is usually built into almost every term policy, so you don't pay extra for it unless the carrier offers an extended conversion option.
Extend term life even if you're uninsurable
If you originally qualified for a “Preferred Plus” rate, you can automatically convert and extend your coverage at a “Preferred Plus” rate regardless of your health at the time you convert.
Same deal if you qualified for a preferred, a standard plus or a standard rate on your original term policy, as then you can convert at the same rate classification.
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 to maintain any portion of your life insurance for longer than the original level premium term period that you chose.
Convert all or any small portion of your life insurance
You DO NOT have to convert the full amount of your term policy, you can convert only a portion of your term and still keep the balance of the unconverted portion as term insurance at a lower cost, to reflect the new lower amount...in this scenario, you'd then have 2 policies.
The ideal term insurance policy to purchase is one that is convertible for the full 10, 15, 20, 25, 30, 35 or 40 year level premium term period and from company that does allow you to convert to their most competitive permanent products.
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.
Term Companies with poor conversion option
Some term life insurance policies are only convertible for the first 5 or 10 years, which is not good.
Some insurance companies also have limitations on what products they'll allow you to convert too OR they'll only allow you to convert to a policy with a very HIGH cost!
Below are some poor conversion carriers or products
Ameritas (without extended conversion)
Independent Order of Foresters
Lincoln National Life
Mass Mutual (without extended conversion)
Minnesota Life (without extended conversion)
New York Life
Ohio National (non Plus products)
Pacific Life (Promise term)
Penn Mutual (non convertible term only)
Principal Life (without extended conversion)
Protective Life (Classic Choice term only)
Savings Bank Life of MA
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, for the entire level term period.
Best conversion carriers or products
American National Life
Ameritas (extended conversion product only)
Guardian Life (extended conversion product only)
Mass Mutual (extended conversion product only)
Minnesota Life (extended conversion product only)
North American Company for Life & Health
Ohio National (Plus product only)
Penn Mutual (conversion product only)
Principal Life (extended conversion product only)
Protective Life (Custom Choice UL product only)
Security Mutual Life
Thrivent Financial (extended conversion product only)
United of Omaha
What does it cost to convert term life?
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...to age 85, age 90, age 100, etc.
As we mentioned above, 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.
Converting term to universal life is most cost efficient
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.
If your health is still good at the time you're considering conversion, it will usually be more cost effective to re-apply for new life insurance as opposed to converting your existing term policy.
It's always a good idea to compare what applying for new life insurance may cost compared to what it would cost to convert.
Cheapest term life insurance is not 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've helped LOTS of people convert their term life policies who could no longer qualify for life insurance or who would only qualify for new rates they could not afford due to having more significant health issues.
We specialize in getting life insurance for people with health issues and it's a rare occurrence when we cannot find coverage for most people, but things like cancer with ongoing treatment, Alzheimer's or dementia or some other very serious health conditions can make you uninsurable.
For those people who have existing term policies and who may not be insurable for new coverage or who have significant health issues, then conversion is an excellent option to maintain any life insurance!!!.
Term life must 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...
There are now financial institutions that may buy your term life insurance policy from you if/when it's no longer needed/wanted.
Term policies almost always must still be convertible to be sold.
Please call or text us 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.