Term life insurance is a policy for a specific amount of time that can be converted into permanent life insurance without typically going through the insurer’s underwriting process again. Depending on your situation and coverage needs, this type of plan may be well worth the investment. Let’s take a closer look at term life insurance that can be converted and some key features it offers.
When you first apply for term life insurance, you’ll have a policy that can last for 10, 20, or 30 years, as long as you continue paying your premiums. If you find that you still need life insurance toward the end of your policy’s term, you may be able to convert your term life insurance to a permanent plan, such as whole life insurance, with no new medical exam or underwriting process. Then, you can enjoy coverage for the rest of your life.1
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The most noteworthy features of a term life insurance policy that can be converted:
With convertible term life insurance, you can eventually switch to a policy that is not for a term limit and can last your entire life. But even if you die during the initial term, your beneficiaries will receive the death benefit once they file a claim.
The conversion period refers to when you can convert your policy to permanent life insurance. While this varies by insurer, it’s usually before the term ends or before you turn 70, whichever comes sooner.1
If you have convertible term life insurance, you can typically choose to convert to any type of permanent policy your life insurance company offers, such as whole life or universal life insurance.1
Some life insurance companies allow partial conversions. If you opt for a partial conversion, part of your term life policy will be converted to permanent life insurance, and the rest will remain term life insurance. For example, if you have an $800,000 policy and convert $300,000 to permanent life insurance, the other $500,000 will remain term life coverage. You can also choose to convert all $800,000 to a permanent life policy, which is a full conversion.
Here are several key advantages of converting term life insurance:
Many convertible term life policies let you choose when you want to convert from term life to permanent life insurance. You can do this any time before the conversion period comes to an end.1
When you convert a term life policy, insurers won’t require a new medical exam. If your health has declined since you first took it out, this can be a huge plus.2
The premiums you’ll pay will be determined at the start of your convertible term life policy. While convertible term life insurance is active, your premiums will remain the same. But keep in mind that once you convert your policy, premiums will increase.1
Convertible term life insurance offers the chance to extend your coverage for the rest of your life. This may better suit your needs if your circumstances change over time.
You might want to explore convertible term life insurance in these situations:
Do you have aging parents you’re providing for or a child with a disability? If so, you may need coverage beyond your policy’s initial term.1
If you have debts, like a mortgage payments and car loan, and don’t believe you’ll pay them off before your initial term expires, it might make sense to convert to permanent life insurance.1 By doing so, you can help protect your loved ones from a hefty debt burden.
As you age and your health declines, life insurance becomes more expensive and difficult to get. If you choose a convertible term life policy, you may not have to worry about taking a new medical exam to qualify for coverage.2
Several alternative options to a convertible term life policy include:
With level term life insurance, you may enjoy level premiums for your policy’s entire term. Your beneficiaries will be owed the same payout regardless of whether you pass away during year one or the last year your policy is active.
Renewable term life insurance allows you to decide if you still need coverage at the end of your term. If so, you may continue to renew your coverage up to a certain age, such as age 70.3
A decreasing term life plan is a type of term life insurance with a death benefit that gets smaller over time. This type of policy is usually tied to a specific loan or debt that you’re gradually paying off.
If you’d like the flexibility of being able to change a term life policy to a permanent life policy, converting a term life policy should be on your radar. This can allow you to switch to lifelong coverage as your long-term needs change.
Aflac is pleased to offer term life insurance with premiums that stay the same throughout the duration of the policy. With our term life policy, you can get something that fits your budget with enhanced coverage tailored to your needs. Contact an Aflac agent today for more information and get a quote.
Explore your life insurance options.
1 Policygenius - What is Convertible Term Life Insurance? Updated March 13, 2023. https://www.policygenius.com/life-insurance/convertible-term-life-insurance/. Accessed April 27, 2023.
2 Investopedia - Convertible Insurance. Updated March 28, 2022. https://www.investopedia.com/terms/c/convertible-insurance.asp. Accessed April 27, 2023.
3 Investopedia – Renewable Term. Updated April 24, 2021. https://www.investopedia.com/terms/r/renewableterm.asp. Accessed April 27, 2023.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400.65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX.Q60000 series: Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Final Expense insurance coverage is underwritten by Tier One Insurance Company.
The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Content within this article is for informational purposes only and does not constitute legal, tax, accounting or medical advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process. This article contains a general overview and is not intended to portray any specific benefits or details of Aflac policies.
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