What to Know About Converting Term to Whole Life Insurance

If the term of your life insurance is coming to an end, you might be wondering what your next steps are. Most term life insurance policies automatically come with a conversion rider that allows for converting term to whole life insurance, should you want to.

So how do you know if converting term to whole life insurance is right for you? We’ll go through the top reasons to converting term to whole life insurance, so that you can make a fully informed decision.

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Reasons to Converting Term to Whole Life Insurance

There are a number of reasons why you might be exploring converting term to whole life insurance. Your insurance needs may have changed since you first purchased term life insurance a number of years ago, but the good news is that you have options. You can either let your term life insurance expire, purchase new life insurance (whole or term), or convert your term life insurance plan to whole life insurance.

So, why might converting term to whole life insurance make sense? We’ll dive into the reasons below.

Finances: you might have purchased term life insurance 10, 20, or even 30 years ago, and your finances may have changed significantly. Whole life insurance may have been too expensive for you years ago, but now makes more financial sense. Alternatively, you may have outstanding debts that you want to protect your children from should you pass away.
Dependents: term life insurance is often purchased to cover your dependents during the years they were most financially dependent on you. But if you now have lifelong dependents, such as a child with disabilities, you may want whole life insurance in order to protect them past a certain term.
Health: you may have been in prime health when you first purchased life insurance, but things can change. Getting whole life insurance when you’re older or in poor health can be difficult and expensive, but converting term to whole life insurance allows you to skip the health exam. That means you’ll qualify based on your health from when you first purchased term life insurance, not your health now.
Savings: one of the upsides of whole life insurance is that you have a savings component to it. Part of your insurance payment goes toward a savings vessel that you can leave to your heirs, use while you’re living, and that grows tax-deferred. Converting term to whole life insurance allows you to start taking advantage of that savings vehicle.

There’s no shortage of reasons why converting term to whole life insurance makes sense, but it might not be the right choice for everyone. Make sure that it fits your insurance needs, your finances, and your goals before converting.

Is Term Life Insurance Better Than Whole Life Insurance?

When it comes to life insurance, there’s no one-size-fits-all approach. The right life insurance for you can depend on several factors, including your financial situation, your health, your age, whether or not you have dependents, and so much more.

Term life insurance is a great option for those looking for affordable life insurance that covers their dependents during the years they need it most. Whole life insurance has more frills than term life insurance but comes at a higher cost, so it really depends on what you’re looking to get from life insurance.

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The Bottom Line

There are a number of solid reasons to convert term to whole life insurance. It’s a worthwhile exercise to find out what it will cost for converting term to whole life insurance and compare that to a few different quotes for whole life insurance to ensure you’re getting the best price. The good news is, you have options when it comes to life insurance no matter your age, finances, or health, and converting term to whole life insurance is just one of those options.

Lauren Lewthwaite Lauren Lewthwaite has been freelance writing for almost five years writing content that ranges from health to insurance and everything in between. Lauren is also a trained translator in French and English and is a dog-mom to an adorable Australian Shepherd.