Upgrading Or Converting Your Term Insurance to Whole Life
So you’re getting your policy and while you don’t have the financial resources to afford whole life, that’s OK. We’ve got a plan.
Convertible Term Life Insurance
We love working with life insurance companies that offer term life insurance that can be upgraded. Or converted. Here’s how it works:
You buy a 20-year term life insurance policy for $1,000,000
During the convertibility period (varies from each company and policy) you can upgrade some or all of your term insurance into whole life insurance
No need to go through full underwriting
It’s like renting a home, buy with the option to buy room-by-room
For many young families, term life insurance is their single biggest safety net, offering maximum financial protection at the lowest possible price. As their financial picture matures, however, those who seek a permanent solution for longer-term planning goals and those who experience a decline in health may wish to explore the pros and cons of a term-to-perm conversion. From MassMutual
Why Convert To Permanent from Term Life Insurance?
Part of the premiums for permanent life insurance such as whole life goes toward the “cash value”, which builds slowly and steadily on a tax-deferred basis. The best part is you can have tax-free access to the cash value that’s grown through policy loans, or you can withdraw money from the cash value life insurance. You can even give up the life insurance altogether surrender it for the cash value. In that case, when you surrender, you will pay for any gains in cash value above what you paid in premium. Term life has no cash value.
You might’ve been told this when you were buying your term life insurance, however, balked at the price for permanent or whole life insurance. Now that you’re making more money, you’d like to buy some lifelong coverage.
You don’t have to convert it all, just however much you want to convert and how much you can afford at that time. You may not have to convert the entire term life policy.
Life changes. Maybe when you bought the term policy you assumed you’d have less obligations and more resources later on in life. Well, that’s perfect for convertible term life insurance because you can choose to upgrade later as your needs change and maybe now you have a lifelong financial dependent, such as a child with special needs. Permanent life insurance can help fund a trust for that person after you die.
Does convertible term life insurance make sense for you? Click here and book a time to find out.