A. For many young people, a term life insurance makes sense, but a convertible term life policy can make even more sense because it provides greater flexibility later on.
Term life insurance provides the insured with a benefit upon death within the stated time frame of the contract, typically 10, 20, or 30 years. If during that time period, the insured experiences a need for permanent life insurance, the convertible term option allows him or her to change from the temporary plan to a permanent plan of equal or lesser face value if the change is made prior to the end of the convertible period.
Perhaps the greatest benefit of convertible term insurance is the guarantee of insurability. Without the conversion option, if you were to purchase a permanent life insurance policy at the end of the term, you would need to undergo medical underwriting. If that process reveals a health condition or the insured’s health has declined since the term policy ended, you may be uninsurable or may be required to pay a substantially higher premium.
In our next blog post, we will compare some of the top term life policies' conversion features.