-
Term life insurance policies only provide coverage for a limited period of time; however, some term life policies are convertible, giving you more security as your insurance needs change.
Definition
Convertible term life insurance is a term policy that can be exchanged for a whole life policy when it expires.
Purpose
This type of insurance is designed to allow policyholders to purchase an inexpensive term policy to cover large debts or expenses, and later buy a more expensive whole life policy as an investment or wealth-building tool.
Underwriting
When you convert a term policy into a whole life policy, the company will not impose any additional underwriting restrictions. This means that if you develop a health problem during the policy period of your term insurance, it will not disqualify you from whole life coverage.
Flexibility
Some term policies are only convertible at the end of 5, 10, or even 20 years. Others renew every year, giving you more opportunities to convert your coverage into a whole life policy.
Cost
A convertible term life insurance policy is typically more expensive than a non-convertible policy. This is because the company knows you may develop health problems during the policy term.
Source:
Copyright 2023, Wired Ivy, LLC