Term life insurance policies are a great option when you have set goals to meet, like paying for your final expenses or paying off any debts you may have. Things change, however, and life happens. As a result, your future financial needs may change over time. For example, if you purchase a home or start a family, term life may not offer you the financial security you will need throughout your life. Converting your term life policy to a whole or permanent life policy may be more in line with your future needs.
Convertible Life Insurance
A convertible life insurance policy starts as a term life policy. As your financial needs change, your policy can change along with them. It can easily be converted to a permanent or whole life policy based on your needs at the time. While a term life policy is pretty much set in stone. It’s in place for a specific amount and for a particular time length. On the other hand, a whole life policy is still for a particular amount (which is usually much higher), but the length of time is left open. Whether you live for five more years or 50 years, the beneficiary collects the same amount.
Pros of Converting Term Life Insurance to Permanent Life
There are many benefits of converting a term life policy to a permanent policy. Having a permanent dependent is often a significant factor. Debts that include car loans and mortgages will also be paid off. Having any debt or financial obligation that would affect your family’s financial security is a good reason to convert your term life policy to a permanent one.
Cons of Converting Term Life Insurance to Whole Life
There are a few cons to this equation. First, if you are near to when your children will no longer rely on you for financial security, converting will have its drawbacks. You will pay more for your premiums and will essentially be buying insurance you may not need. You will also, more than likely, have a much lower return on your investment. However, some options may make more sense for you.
Alternative Options
If you aren’t sure that converting from a term to a whole/permanent life policy is right for you, there is always the option of closing your old policy and purchasing a new term life policy. You also have an option that includes final expenses insurance. It’s one of the best ways to pay for your burial or funeral and is less expensive than many other options.
Life insurance can be confusing and frustrating when you are trying to figure out precisely what you need. The experienced insurance professionals at Randy Jones Insurance Services are available to provide you with the guidance you need when purchasing a life insurance policy. Call and schedule a consultation with us today to get the help you want in finding the type of policy you need.
