Why Buy a Convertible Term Life Insurance Policy?

One of the most difficult decisions consumers face when buying insurance protection is whether to opt for term or whole life coverage. On the one hand, term plans gives policyholders large amounts of protection at very affordable premiums. On the other hand, whole policies provide a lifetime of protection with rates that never increase. For the best of both worlds, consider a convertible product.

Convertible term life is a product that gives the insured the option to move to whole coverage at any point without penalty. Most policies offer a conversion option to allow customers to adjust their coverage as their circumstances change. With this flexible product, young and healthy consumers can take advantage of the low premiums of a term plan until they can afford a whole life policy for more comprehensive protection. A permanent plan can later give the insured the stable coverage he/she needs for a maturing family.

No Medical Exams

If you decide to change your plan to a permanent policy, you can do so without have to submit to a medical exam. In other words, no underwriting is necessary when the plan is revised. You simply inform your insurer of your desire to change your policy, and the switch is made. If you applied for a permanent policy without convertible term life, you would have to take a medical exam. Even minor health problems could then disqualify you from receiving protection, but with convertible plans, you can make the switch without this hassle.

Savings and Cash Value Accumulation

These products can help you save on your premiums in two ways. First, you begin your contract with term premiums, which are typically the cheapest available. Secondly, once you switch to permanent coverage, your premiums will never increase again. Regardless of your age or any changes in your health condition, your premiums will remain the same once you switch to a permanent counterpart. You can avoid costly premium increases in this way.

Although a convertible product will not accumulate cash value initially, it will begin building value as soon as you switch to permanent coverage. If you convert your policy fairly early on, you can potentially enjoy decades of cash value accumulation. With a traditional term product, your policy would provide face-value-only protection, meaning the plan would have no cash value once it expired.