Do you know that you might be able to convert your term life insurance policy into a permanent life insurance policy? Most term life insurance policies come with an option to convert a portion up to the full death benefit to a life insurance policy that is built to last your entire life. There are many of reasons why converting from a term to a permanent life insurance policy can work out for you, so learning what the possible benefits are to converting your policy is in your best interest. If you are thinking about converting, be sure to check with your insurance provider first to make sure converting is still an option, since the eligibility for you to convert varies from insurance company to insurance company and policy to policy. When getting a term life insurance policy be sure to know what the convertibility privileges are for that individual contract.
Using the Ability to Convert to Your Advantage
Converting a policy is often a lucrative move for people whose lives have changed from taking out their term policy. When you convert an existing term policy, your insurance company won’t need to reevaluate your insurability. Therefore, if you are in the latter years of a term policy and are no longer insurable in the eyes of insurance companies, this option may be a great chance for you to secure coverage during a time where you otherwise wouldn’t be able to. If you took out a policy when you had a need for more coverage you might want to covert only a portion of the death benefit due to the change in needs. This partial conversion might also be an option depending on your specific policy and terms. A parent whose children are now on their own financially and now their mortgage is paid off might not need the full death benefit when they took out the policy years ago. Overall, having the ability to convert all or a portion of your life insurance coverage could be a blessing during the end of the term life insurance policy.
Term Life Has No Cash Value
If you are looking for long term cash income, whole life and universal life insurance offer growing cash value. The money it has built can be withdrawn and loaned out tax-deferred, and the option to have a source of cash later in life is appealing to many who are approaching retirement age. The entire policy can also be surrendered for a sum of cash value as well.
You might want to consult with a financial advisor before you start withdrawing money from your life insurance to make sure it is the best choice to make. Managing your withdrawals from and growth of your life insurance cash value carefully and with goal in mind can help you with other parts of your financial plan such as real estate, retirement, and loans. Finding a financial advisor that you trust to help plan out your whole life and universal life insurance policies for the could lead to the most optimal results.
The Timing is Now
When you were first in the market for life insurance you might have been a young adult and could only afford term insurance for the amount you had budgeted for a life insurance payment.
Now that original term policy might be running out. These two conditions together might create a favorable time to convert your term life to permanent life insurance. Ask your insurance company about your conversion period, when your term life ends, and prepare your finances for conversion. As long as you are still in the conversion period and are budgeting appropriately, you might be able maximize the benefits of both term and permanent life insurance policies.