The Convertible Term Policy: Because Life Changes

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family changeIronically, the one constant you can always count on in life, is change. Some change, like age or illness, you can’t control; other change, like getting married or having children, you can. But either way, as your life circumstances change, so do your responsibilities and financial needs.

Life Insurance was created and built around that need to prepare for and minimize, the risks associated with both expected and unexpected life events and changes. Whole Life Insurance was not only designed to give you living benefits, like cash value, but also created to protect you and your family from financial distress or even devastation, that disastrous change can bring.

As life changes, so must your ability to adjust your level of protection to meet it.

What is a Convertible Term Policy?

A Convertible Term Policy allows an individual who already owns term life insurance to convert their policy into permanent life insurance without having to undergo medical underwriting.

Many individuals are unaware of how permanent life insurance really works and the living benefits that come with it. So an individual, knowing they need financial security for their family in case tragedy strikes, opts to buy term insurance. Term insurance does pay a death benefit, but it’s a coverage expense that a person could likely outlive – it lasts for just 10, 15, or 20 years.

As with all life insurance, term insurance requires a medical exam. If you own term insurance and it’s about to expire, you would have to submit another medical exam for underwriting to determine your insurance’s cost. This requirement could be catastrophic for some, as their health was better 20 years ago than at present; which means their insurance would cost more. With a Convertible Term Policy, you cannot be refused the new coverage and it does not require a new medical exam.

Converting to Permanent Insurance

A Convertible Term Policy allows the policy-holder to convert all or a part of their Term insurance within a specific period of time. All companies have their own guidelines and regulations on how or when the conversion may take place. Some companies require the conversion within the first 20 years of coverage, some allow it up to age 56, others up to age 70.

In addition to the guaranteed death benefit that comes with permanent insurance, you have the potential to earn dividends and – the most popular advantage – you will be building a cash value or liquid asset account.

To learn how to convert your term policy, or for more information on permanent life insurance and the benefits of a cash value policy, contact a Paradigm Life agent.


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