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Convertable Term Life Insurance--What Is It?

By Tes Kurtz on December 11th, 2009

Convertible term life insurance is a life insurance policy that has a provision allowing you to convert your term policy into a whole life insurance policy. This conversion should be done during the policy's specified time period, and the change can usually be made without having to pass an additional health exam.

Since you do not need to provide proof of good health, convertible term life insurance policies carry more risk for the insurer. Generally, this makes convertible term life policies more expensive than similar policies without a conversion provision. However, convertible term life is usually still lower in cost than most whole life insurance policies. Additionally, like other term insurance, convertible term life insurance provides coverage for a specified period of time.

Convertible term life insurance is quite advantageous if you are young and healthy. It's a great starter policy that provides basic coverage for you and your family at a relatively low cost. When and if you are ready, you can convert your term policy to a whole life policy to better meet the needs of your growing family.

Transitioning from Convertible Term to Whole Life Insurance

Making the transition from a convertible term life insurance policy to a whole life policy is pretty easy. Unless otherwise stated in your policy, the conversion is not mandatory. So, if you prefer to maintain your term policy, and would rather not make the conversion to a whole life policy, you can maintain your term life coverage.

If you do decide to convert your term policy, part of the ease of the transition comes with the fact that there is no additional underwriting necessary. Underwriting refers to the process by which potential policyholders are evaluated and classified to find a fair premium amount.

More good news: there are typically no penalties to convert your policy. You can usually convert from a convertible term policy to a whole life policy whenever the time is right, given that you make the change while in your policy's specified time period. In fact, most policies will even let you expand your coverage to fit the needs of your changing family and circumstances.

Benefits of Converting from Term to Whole Life Insurance

One of the benefits of this conversion is that a whole life insurance policy that is started from a convertible term life insurance policy can offer static premiums that may not change during the life of the policy.

Another benefit is cost. Convertible term life insurance is a cost-effective option if you want basic coverage now with an incentive to convert to a whole life policy in the future.

A convertible term life insurance policy is a low cost option that provides the peace of mind of life insurance coverage. Obtaining competing quotes from qualified agents is simple, visit compuquotes.com and enter your zip code to get started.

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