What Is Convertible Term Life Insurance?

Convertible term life insurance lets you exchange your term policy for a permanent life policy. Learn why this option can be beneficial.
Robin Hartill, CFP®
By Robin Hartill, CFP® 
Edited by Lisa Green Reviewed by Tony Steuer

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Convertible term life insurance is a type of life insurance that gives you the option to convert a term policy into a permanent policy. When you buy term life insurance, coverage lasts for a set period of time only — like 10, 20 or 30 years.

But you may want to switch to a permanent policy like whole life insurance, which typically provides lifelong coverage, if you expect that you’ll still need life insurance after the term expires.

Some reasons you may want to convert a term policy to a permanent life insurance policy include:

  • You’re still providing for dependents or paying off debt and want continued financial protection for your loved ones.

  • Your health has declined and you want to provide a death benefit to your survivors. 

  • You bought a term policy while you were relatively young, when premiums on a permanent policy may have been prohibitively expensive, but you can afford them now that you’re older.

The majority of term life policies are convertible. Some policies have a built-in conversion provision, while others require a life insurance rider called a term conversion rider.

You’ll usually have a limited window of time to exercise the conversion option. Some policies require you to convert within the first 10 years, while others allow you to exchange your policy before a certain age, like 65 or 70. While the specific rules vary by policy, you’ll typically need to convert your coverage before the term expires.

One benefit of convertible policies is that you can usually convert the policy without going through new underwriting or another life insurance medical exam. This means you won't be penalized if you’ve developed new medical problems since you obtained the policy. Your premium will be based on your health at the time you bought the original policy. However, your age at the time you convert the policy will also affect your rate.

Often there is no fee for converting a policy. But because permanent policies are substantially more expensive than term policies, you can expect to pay higher life insurance premiums.

To find out if your term policy is convertible, read the policy documents or contact your life insurance company. If you’re shopping for life insurance, be sure to ask about this feature before you sign the contract. Life insurance needs can change over time, and convertible term life insurance gives you flexibility to adjust accordingly.

Learn more about term and whole life insurance

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