Ron Attias is a licensed insurance broker. He has no particular loyalty to any one insurance company, so he is able to shop all major insurance carriers. This means that you always get the BEST plan at the LOWEST price. Each plan can be customized to fit your specific healthcare needs and budget.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jul 9, 2019

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Did you know that owning a convertible term life insurance policy will allow you to convert part or all your coverage amount to whole life? Did you also know that you don’t need to go through the underwriting process or take another medical exam, regardless of your current health conditions, and you will get the same health class rating as when you first bought the policy?

In this post, I will discuss all that you need to know about converting your life insurance to whole life, and the best companies that offer the most significant conversion opportunities.

Related: How do I find cheap term life insurance?

What is Convertible Term Life Insurance?

Term life insurance by definition is protection in which you buy a policy with an expiration date in mind. However, what is expiring is your guaranteed level premium for that period, not your coverage. You can keep the coverage if you want by choosing one of the following options:

  1. You can renew your coverage after the initial term is over to an annual renewable term, or ART, which will increase every year until the policy maturity date, which typically is age 90 to 95 years. Your death benefit will stay level, but the premiums will be astronomical because they will change every year as you get older. This is for someone who is looking for a short-term policy.
  2. You can convert your term policy to permanent coverage, like universal life or whole life. You must convert it before the end of the term, or a specific age, which is usually 65 to 75, but this depends on the company from whom you bought the policy.

Furthermore, any choice that you get will not require you to prove your eligibility for coverage. This means you don’t need to undergo an exam or answer any health questions, and instead the insurance company will use the application you signed when you first bought your policy to classify your health and calculate your rates.

So if you purchased your policy 30 years ago and got a preferred best class, they will use the same one for your new policy, even if your current health has changed. Keep in mind that your new rates will be based on your current age.

This agreement must be completed by the end of the term or a specific age, whichever comes first. Failing to do so will force you to apply for a new coverage in which you will need to go through the underwriting process.

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What Does It Convert To?

It would convert to permanent coverage, and the type would be either whole life or universal life, depending on the company and their offerings at the time of your conversion. Whole and universal life are similar policies when it comes to the cash value accumulation and guaranteed death benefit.

They differ when it comes to the flexibility aspect–universal life allows the policy owner to change the premium amounts and cash benefit down the road if he chooses so, while a traditional whole life policy doesn’t. You have a fixed premium amount and a fixed death benefit.

Reasons to Convert Term Life to Whole Life Insurance

  • If your health went south or you discovered you have a terminal illness such as cancer, it would be advisable to convert your term policy to whole life. We buy term life “if something happens,” with the inner hope that it won’t, but if it does, converting the policy earlier rather than later is best.  The longer you wait, the more you will pay since your age is the only parameter the company is using to calculate the rates.
  • You wanted to buy a whole life policy but, opted for term life because you couldn’t afford it, with the promise to do this later in life. Now, you are in a financial position to do so, but not as healthy as you used to be. Shopping for a new policy means you may pay more or get declined, so deciding to convert your current term is a better option.

Both are related to your overall health. Any time you have a need for a permanent coverage and know that you either can’t get it somewhere else or it would cost more, you need to convert your term policy to whole life.

Reasons Not to Convert Term Life to Whole Life Insurance

  • If you decide that you no longer need the policy for any reason like the kids are out on their own, the mortgage is paid off, or you have enough savings should something happen, you do not need to convert your policy.
  • You may still need a policy at the end of your current policy, and you are in a great health, so you can get a better deal if you apply for a new policy. You want to compare all your options before making a selection.
  • You need a smaller burial policy at the end of your current term and are healthy enough to apply for a new one.

If you are healthy and still need a policy, you are better off getting a new one and not converting your current one.

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How Can I Get a Convertible Term Life Insurance

The good news is that most term life insurance policies already include this provision at no extra cost to you. The time or age that you are allowed to convert your policy will depend on the company from whom you purchased the policy. There are, however, a few companies that do charge for this rider, so make sure you read the fine print or get a broker to do this for you.

Term Conversion By Company

Below are examples of how insurance companies handle conversions. Any time you buy term coverage, you want to pay attention to the conversion periods.

  1. AIG –  Conversion allowed on Select-A-Term policies at the end of the term period, or up to age 70, whichever comes first.
  2. Assurity – 1 year prior to the end of a 10-year plan, and 2 years prior to the end of 15-, 20-, or 30-year plans, or the insured attains age 65.
  3. Banner – Convertible at the end of the guaranteed level premium period, or up to age 70, whichever comes first.
  4. Protective – For 10-year terms: up to 8 years; for 15-year terms: up to 13 years; for 20-, 25-, or 30-year terms: up to 18 years.
  5. Prudential – Convertible at the end of the initial term period, or the insured’s 65th birthday, whichever comes first.
  6. Sagicor – convertible up to age 70.
  7. SBLI – convertible before age 70.
  8. Symetra – convertible before age 75, or the end of the term, whichever comes first.
  9. Transamerica – Conversion allowed at the end of the initial term period, or before the age of 70. If you were preferred plus, they allow you up to age 75.
  10. United of Omaha – For term answers 10, 15, and 20 before age 75. For term answers 30, only during the first 20 years.

Final Thought

When we buy a term life policy in our 30’s or 40’s, we don’t think about what will happen when the policy expires.  Even worse, we don’t even think we will need it when we are 70 years old. The ability to convert your term policy at the end of your initial period may be one of the most critical elements to have when buying a good life insurance policy.

The fine print lines are too many to mention, while some companies will allow you to convert the policy at the end of your guaranteed period, others will only let you convert it in the first 5–15 years, even if you bought a 30-year term. You can go ahead and run the quotes on this page.