Why Should you Consider Converting your Term Life Insurance Policy?

Why Should you Consider Converting your Term Life Insurance Policy?


Term life insurance is a low cost option for obtaining life insurance. Depending on the carrier you choose, the term and options vary. Some terms are as low as a 5 year term, whereas some term coverage stays in place until the age of 65 or even higher. The length of the term will impact the cost of the coverage. However, when it comes to purchasing coverage, it is important to look at other factors of the coverage as well.

The key elements of term coverage:
* Cost of coverage
* The length of the term
* Is the policy renewable after the term?
* What are the rates for renewing the coverage?
* Is the coverage convertible to permanent coverage?
* What options are available for conversion?

Ultimately, this low cost term life insurance can become quite expensive as a result of the rates that may be locked in for a period of time. It is the case that with most term policies, the conversion option is likely to be very helpful in the future. If your health status were to change and you become uninsurable, you will often have the ability to convert to permanent coverage without a medical exam.

Here are 4 main reasons to convert your term coverage:

1. A change in your health – You have received a sub-standard rating and/or you are no longer able to qualify for life insurance. With your conversion option, you will most likely be able to purchase permanent coverage without new medical conditions being a factor.

2. Lock in your rates – Converting to permanent coverage will mean that you are purchasing permanent coverage. The rates will remain the same for the life of the policy and you will not have to worry about renewing your coverage. The older you are, the more expensive your rates will be.

3. A change in your residency – After obtaining your policy in one location, let’s say that you moved to another country. Most insurers in Canada will not offer new coverage if you are living abroad. Since the conversion feature in your policy is contractual, converting to a permanent plan is allowed regardless of location.

4. A change in occupation – If you have changed occupations and are now working in a more dangerous environment, conversion allows you to obtain permanent coverage at standard rates.

Most people do not realize the value of the Conversion Option contained in their term insurance policy. It may be beneficial to schedule a review and determine if you have a permanent need for insurance or if it is the right time to convert. You always want to be well-informed and consider all your options!

For more information, please be sure to contact Harry Perler at hperler@perlerfinancial.com or call at 604.468.0888