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Can I Convert a Term Life Policy To a Permanent Policy?

Can I Convert a Term Life Policy To a Permanent Policy?

Both term life insurance and permanent life insurance have their advantages for individuals. Term provides beneficiaries with a high death benefit for a low premium, while permanent has a premium that doesn't change that is higher for a number of reasons. Both benefit different types of individuals in different ways.

If a person gets a term policy, they may decide later that they want a permanent policy. This can bring about confusion because they may cancel their term policy in order to have permanent coverage. Then again, they may acquire permanent coverage and decide they don't want that after all. That's why it is good for you to know the differences between the two insurance types.

Term vs. Permanent

Term life insurance is very popular because individuals can ensure that their beneficiaries get a high death benefit. In the meantime the premium is a low one. When you compare the premium for the same death benefit as permanent life insurance, the premium is higher and there are reasons for this.

First of all, term life insurance is rather cut and dry. You pay a premium for a specific death benefit amount and then that is the amount that will be paid to your beneficiaries. That is it. There are no bells and whistles. Permanent insurance, on the other hand, does consist of some bells and whistles, which is responsible for why the premium is higher.

Permanent life insurance gains cash value over time. This enables individuals to act as their own bank at some point. A portion of the premium is invested into investments of the insurance company's choice. Over time, dividends are gained and that is added to your policy. Over time, you are going to be able to withdraw the money from your account so that you can meet any financial obligations that you may have. You can then pay the money back.

Another thing you should know about term vs. permanent is the fact that term is temporary. You choose your term, which can be up to 30 years. The main issue is when you outlive the term and then have the option to renew at a higher premium because you're older. Even if you decide upon permanent insurance, the premium is going to be higher than if you would've signed up for it when you were younger.

Converting Term to Permanent

When you want to convert from term to permanent, you need to contact your agent. Tell them that you want the same death benefit, but you want a permanent policy rather than one that is going to expire after a certain term. You want one that is going to gain cash value for you.

Your agent will then give you conversion paperwork. This paperwork is necessary so that you don't have to start the whole application process over. It is designed specifically for conversions. You need to make sure you are doing this with the same agent. Doing so with a different agent is not a conversion, but is you signing up for a new policy. Conversion is much easier because you can bypass the steps of having to apply for a brand new policy.

Just make sure you explore the plans ahead of time so that you can find the one that is best for you. Once the paperwork is signed, make sure you have a copy of the paperwork in case any questions come about, and you are done. You new policy will then be mailed to you for you to review carefully

ING Transamerica Insurance and Investment Group American General Life Companies Prudential Genworth Financial Services SBLI Life Insurance Company

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