Convertible Term Life Insurance

Eric Van Haaften Term Life Insurance

If your term life insurance policy is close to expiring, you might be exploring what to do next.

If your term policy is convertible, you can seamlessly transition to permanent coverage without the hassle of reapplying.

This informative article will explain how convertible term life insurance functions and outline the conversion guidelines of several leading life insurance companies.

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What is convertible term life insurance?
How does convertible term life insurance work?
Why do people convert their term insurance policies?
A complete list of companies and their conversion rules!
How do you buy a convertible term life insurance policy?

Convertible Term Life Insurance

Term life insurance offers an affordable way to secure financial protection for your family over a specific timeframe, generally ranging from 10 to 40 years.

If you were to pass away within this period, your beneficiaries would receive a tax-free payout.

One of the features of most term life policies is their convertibility into permanent life insurance coverage.

A conversion option allows you to transition from cost-effective term coverage to comprehensive lifelong coverage without undergoing another medical examination.

This valuable feature allows you to lock in your insurability based on your health at the time of your initial application, regardless of any subsequent health issues.

However, while your original health rating remains intact, the premiums on your new permanent policy become more expensive as you get older.

In addition, most policies only offer a conversion feature for a limited period or until you reach a certain age threshold, often around 70.

If you decide against converting when your policy ends, your premiums will typically automatically renew yearly. That sounds great, right?

Initially, this may seem cost-effective but can become increasingly expensive with age, making renewable terms more suitable for short-term financial strategies than long-term security.

How a Life Insurance Conversion Works

If you are considering an upgrade, remember that each insurance company has unique conversion rules, but the process is easy to navigate with proper guidance.

You can start by contacting your insurer or one of our agents to explore your options for converting to a whole or universal life insurance policy.

We recommend switching to universal life insurance if this option is available with your existing insurer because it’s cheaper than upgrading to a whole life policy.

Remember, when transitioning, you don’t have to convert the entire amount of your term policy. Many people choose a partial conversion because permanent coverage typically costs more than term life insurance.

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Partial Term Life Conversion

Frank secures a life insurance policy with a $500,000 death benefit. Over time, he faces health challenges that disqualify him from future coverage.

Frank partially converts his term coverage, moving $250,000 to permanent insurance while keeping the remaining $250,000 term insurance portion active until his contract concludes.

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Full-Term Life Conversion

Sandy, a successful small business owner, has made plans for her child’s future. Knowing her child won’t take over the business, she transitioned her $1,000,000 term insurance policy into permanent coverage.

This move allows Sandy to retire comfortably and sell her business without worry, ensuring her child’s financial security.

Why People Convert Term Policies

Transitioning to universal or whole-life insurance is a no-brainer for those wanting stable premiums and lifelong coverage.

While permanent insurance premiums are higher, they become more manageable and practical as your income grows and financial responsibilities broaden.

Permanent coverage is especially advantageous for those who want to support their surviving spouse and children.

Lifetime Coverage: As financial responsibilities or family needs evolve, you may want coverage that lasts a lifetime beyond the initial term period.
Health Changes: If your health has declined, converting allows you to maintain coverage without a new medical exam, securing your insurability.
Cash Value: Permanent life insurance builds cash value over time, which can be borrowed against or used as an investment option.
Legacy Planning: Permanent coverage can be a wealth transfer tool to leave your children a lasting legacy.

Our knowledgeable agents are ready to help you explore the conversion opportunities available with your existing policy.

We will contact your insurance company, access the specifics of your current policy, and identify when your term conversion period ends.

Then, our team will tailor a plan that fits your needs and budget based on the conversion privileges available with your current term insurance contract.

If you’re on a tight budget, we may be able to lower your death benefit to help you save money on your new permanent life insurance policy.

Finally, we will be here from start to finish to seamlessly guide you through all the required paperwork with your existing insurance company.

Easy Life Insurance Conversion Process

Convertible Term Insurance Companies

Navigating the complexities of life insurance conversions requires expert guidance.

Our team of seasoned insurance agents is well-versed in the conversion rules and deadlines imposed by many leading life insurance providers.

We have highlighted the conversion guidelines of many of the top insurers to ensure that you can transition your coverage seamlessly.

Banner Life

Banner Life and its sister company in New York, William Penn, provide cost-effective term life insurance solutions.

Both companies allow conversions during the guaranteed level premium period or until age 70, whichever occurs first.

You can only convert to Banner Life’s expensive Step Up universal life insurance policy. This plan provides lifetime coverage as long as premiums are paid regularly.

Corebridge Life

Corebridge Life and its subsidiary, American General, are recognized for their Select-A-Term life insurance product.

Select-A-Term policyholders can switch to permanent coverage before their term expires or by age 70, whichever occurs first.

In the first 8-10 years of your term policy, you can convert to a cost-effective, guaranteed universal life policy called the Secure Lifetime GUL.

Alternatively, at any time, you may choose the pricier Protection Extend IUL or opt for an American Elite Whole Life policy.

Genworth

Genworth has stopped selling new life insurance policies, but we still represent them and can help you evaluate your options.

Typically, those with a Colony Term UL or Sure Term policy can convert part or all of their term policy into any universal life insurance policy offered by Genworth.

This conversion privilege is accessible during the initial term or until the insured reaches 75 years old, whichever occurs first.

Additionally, a one-year conversion option is available for Sure Term 10-year policies issued between 75 and 80 and Sure Term 15-year policies issued at 75.

John Hancock

John Hancock allows you to exchange your policy up to the end of your level term period or the policy anniversary nearest the age of 70.

You can swap your term policy for any permanent life product in John Hancock’s portfolio in the first four years.

However, you can only switch to products used specifically for conversion after five years or until the end of the level term duration.

Lincoln Financial

Lincoln National allows policy conversions until you reach 70 or your term ends, whichever occurs first.

However, given Lincoln Financial’s acquisition of numerous insurance firms, conversion guidelines may vary.

These variations could include minimum coverage requirements, conversion eligibility timeframes, and specifics tied to your initial term policy.

We encourage you to contact us for detailed information on your policy’s specific conversion rules.

Mass Mutual

Mass Mutual offers the option to switch your term life insurance plan to a permanent one, providing an added benefit known as a conversion credit.

This incentive helps when transitioning to permanent coverage by adding cash value or discounting the new policy’s initial premium.

The Mass Mutual conversion credit applies only to Whole Life Legacy 100SM or Whole Life Legacy 20 PaySM plans.

Met Life

MetLife has shifted its life insurance operations to Brighthouse Financial. Brighthouse policyholders can extend their coverage throughout the term until age 70.

For those whose policies were issued after turning 65, there’s only a window for conversion within the first five years.

However, MetLife provides a single conversion choice, the Premier Accumulator Universal Life policy, which is expensive and lacks premium guarantees.

Mutual Of Omaha

Mutual of Omaha offers different options for exchanging your policy, depending on the underwriting process you went through initially.

Since the Term Life Express policy doesn’t require a medical exam, there’s a two-year waiting period before you can change to Guaranteed Universal Life or Living Promise Whole Life policies.

There’s more flexibility for those with a Term Life Answers policy, which involves a medical exam. You can convert part or all of your term policy into any permanent product United of Omaha offers.

North American

If you’re a North American policyholder covered under the Advantage Term plan, you can switch to its’ popular Custom Guarantee UL product.

You can convert the 10-year and 20-year term policies during their fixed premium duration or before age 74, whichever is sooner. However, if you have a 30-year term, a conversion must be done by age 69.

Importantly, no matter when your policy started, there’s always at least a five-year window for conversion.

Pacific Life

Pacific Life has two competitively priced term insurance options: PL Promise and Elite Term.

Both policies allow for complete conversion rights throughout your selected term length or until age 70, whichever comes first.

Moreover, policyholders become eligible for a conversion credit after maintaining an Elite Term policy for at least one year.

This conversion credit equals one year’s term premiums, which can be applied when transitioning to any of Pacific Life’s universal life insurance plans.

Principal Financial Group

Principal offers two pathways for converting your policy into permanent coverage: the Standard Conversion and the Conversion Extension Rider.

Under the standard option, you can switch within a set conversion timeframe or by the policy anniversary closest to turning 70.

Meanwhile, the Conversion Extension Rider broadens this window by allowing conversion until the full term is reached or you reach age 70.

Given the Principal’s detailed rules on conversions, we recommend contacting us directly for specific guidance regarding your policy’s options.

Protective Life

Protective Life policyholders can convert before age 70 or two years before the end of the level term period, whichever comes first.

Within the first five years, you can switch their covert to the highly popular Advantage Choice, which guarantees coverage for a lifetime.

However, your conversion options are limited to two expensive permanent policies five years after the original policy start date.

For those looking for potential coverage that could last a lifetime without guaranteed premiums, the ProClassic Legacy UL is the best choice.

On the other hand, Non-Par Whole Life offers guaranteed lifelong coverage at a higher price point, making it ideal for covering final expenses.

Prudential

Prudential offers two term life insurance options, Term Essential and Term Elite, each with unique conversion benefits.

Term Essential is the more budget-friendly choice, allowing policyholders to convert to any permanent plan until age 65.

Notably, there’s a minimum five-year conversion window regardless of when you buy this policy. So, if you purchase at 64, you are still eligible for conversion up until 69.

On the other hand, Term Elite provides flexibility in conversion from the first anniversary up to age 65.

Plus, if you convert during the first five years, you get premium credits, which are applied to your initial universal life insurance premium.

Transamerica

Transamerica offers Trendsetter Super and Trendsetter LB term plans, which can be converted before the end of the initial premium period or by age 70, whichever comes first.

Plus, if you were in excellent health at application time and received their best rate class, you have until age 75 to convert.

Transamerica only provides the moderately priced TransACE CV universal life policy as its sole conversion option.

Voya Financial

Voya Financial has ceased offering new life insurance policies through its ReliaStar Life Insurance Company subsidiary.

However, the company remains dedicated to honoring all commitments to current policyholders, including paying death benefits as promised.

For those holding existing term life policies from Reliastar, you can switch to either the VOYA Universal Life CV or Indexed Universal Life Global Choice contracts.

However, neither of these Reliastar permanent policies comes with lifetime guarantees.

Given the complexity of Voya’s rules, it is recommended that you contact us for detailed guidance on your policy’s conversion terms.

Buying Convertible Term Life Insurance

As you realize, switching from term to permanent life insurance will generally cost more than securing a new convertible term policy.

So, if you are in good health, you should weigh the benefits of new term policies against your current plan’s conversion options.

Shopping around for different term life insurance quotes can help identify the most suitable and affordable coverage.

Many healthy individuals may be eligible for new policies through a straightforward no-exam underwriting process, though some insurers still mandate a brief medical exam for all applicants.

Before ending your current life insurance plan, you should be sure you have already been approved for another policy.