Term Life Insurance Articles
When Is The Best Time To Covert A Term Life Policy To A Whole Life Policy
2010-01-15
All major types of insurance have their problems. Term life insurance - by far the most common type of life coverage purchased - expires eventually, and if the policyholder doesn't die before the policy ends, there's no monetary benefit. Whole life insurance policies allow money to be taken out from the premiums paid after a certain span of time, but they're far more expensive than term policies and offer less of a payout to beneficiaries in most cases. For this reason, many consumers choose to buy a convertible term life insurance policy. This special form of life insurance coverage offers the best of both worlds to policyholders. This insurance acts as a normal term life policy, but a policyholder has the convenient option to change it into a whole life policy before it expires. This makes convertible plans one of the safest forms of life insurance because it guarantees some sort of benefit for the policyholder.
However, this makes it important to decide exactly when a policy should be converted. If you convert to a whole life policy too early, you'll increase your premiums without much of a benefit. If you convert it too late, you may not get much of a benefit from the whole life insurance portion of the policy.
You'll need to carefully read your policy in order to understand when you can convert. Most policies require you to maintain your term life insurance coverage for several years before conversion; so making an immediate change isn't possible (though you wouldn't really want to do that, given the nature of the policy). You should also find out whether premiums paid into your term life insurance coverage will carry over when you convert your plan to whole life insurance. This is the case in many newer policies. The entire premium may not be added into your whole life investment, but a portion of the premiums will probably count towards your converted plan. Once you find out what amount (if any) will carry through, it's a simple case of mathematics. Determine the amount that you'd pay for the whole life premiums, and contrast that against the amount that you'd pay for term life coverage, taking into account any premium amount that will carry through during the conversion. Since a whole life policy is a better investment than a term life policy, if you're young and relatively healthy, you should consider conversion as soon as you can afford the higher premiums of the whole life insurance coverage.
Remember when you're looking for term life insurance quotes that a convertible policy is a good investment if you plan to convert the policy at the right time. Think about conversion early, and you'll encounter some major benefits.
