Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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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

UPDATED: Aug 25, 2021

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The Brief

  • Term conversion rider life insurance allows the policyholder to convert their term insurance policy to a permanent life insurance policy
  • Every term conversion rider has an expiry date
  • There are no conversion fees but the rates may change based on your age, the type of permanent product, and the insurance company

Term conversion rider life insurance is where the policyholder can convert their existing term life insurance policies into a permanent policy.

Most term conversion riders are built into a policy at no extra cost, but some companies may charge a rider fee.

The amount of premiums that you pay after conversion are generally not affected by your health. However, your age and the type of permanent policy purchased affect the amount of premiums paid.

Continue reading this article to understand more about term conversion rider life insurance. Enter your ZIP code in the free comparison tool below to get term conversion rider life insurance quotes in your area.

What is term conversion rider life insurance?

What is a conversion option on term life insurance? What is a life insurance conversion? Many people ask these questions while searching for term life insurance since convertibility is a popular add-on.

A term conversion rider life insurance company offers the policyholder the opportunity to convert an existing term life insurance to permanent life insurance, usually without requiring a medical exam.

Many term life insurance policies have a conversion option that is offered without any fees, but some companies may opt to charge a rider fee.

The conversion option indicates that you can easily change your term policy to a permanent policy, such as whole or universal life, even if you wouldn’t normally qualify for it.

However, it is only possible to take advantage of the rider if your policy has not reached the end of its term.

With term conversion rider life insurance, you can retain your initial health rating even if your health conditions have deteriorated to a level that might otherwise make you uninsurable or raise your rates.

In addition, term conversion rider life insurance gives you a chance to decide how much of the coverage you want to convert.

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How does a term conversion rider work?

What happens when you convert a term life insurance policy? Term conversion riders are designed to last for the duration of your term life insurance policy, generally between 10 and 30 years.

Once the term ends, your coverage ends along with your ability to convert to a permanent policy.

Every term conversion rider has its expiry date determined by the product and the insurance company. Until the expiration date of your terms, you have an opportunity to convert your term policy into a permanent policy.

If you convert before your policy ends, your insurance company may allow you to get your permanent policy without going through the underwriting policy again.

They may still consider your age, but it is unlikely that you’ll have to have a medical exam.

How much is term conversion rider life insurance?

The conversion cost is usually $0. However, your premiums will likely increase drastically, about 5-15 times if you switch from a term policy to a permanent policy.

Below are some sample rates that compare the difference between term and whole life insurance rates:

Term vs. Whole Life Comparison for 35-Year-Olds
Healthy 35-year-oldPolicy AmountPolicy Amount
Premium per month based on policy type$100,000$500,000
Term$15.84$45.94
Whole$108.66$516.78
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Term conversion rider life insurance rates are determined by age and insurance company. However, when you convert to a permanent policy, your rates will be determined based on the rates for that type of policy.

The amount you convert will also affect the premiums you will have to pay.

For instance, if your initial policy has a $500,000 death benefit, and you can convert $250,000 of it into a permanent policy, you will likely pay less for a permanent policy since it has a lower benefit.

On top of that, if you have the option of keeping the remaining $250,000 in a term life policy, the premiums on the remaining policy would decrease due to the reduced benefits.

Together, however, the two policies would likely exceed the price of the initial policy.

The time you convert your policy might also affect the rates. Some companies may offer extra benefits or discounts for converting your policy within a certain amount of time. You may want to check with your insurer if this is an option.

Who offers the best term conversion rider life insurance?

Term conversion rider life insurance policies are offered by many life insurance companies located in different states. It may be challenging to determine which companies offer the best term conversion rider life insurance.

With that being said, the best life insurance companies should have strong financial ratings, have a long-standing positive history in the insurance industry, and be reputable.

In addition, they should have several options from which their clients can choose, offer discounts to their clients, and make it easy for their clients to access term conversion rider life insurance quotes.

Some of the top term life insurance companies include Northwestern Mutual, Guardian, MassMutual, AARP, New York Life, State Farm, USAA, and Pacific Life.

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Should I buy a term life conversion rider?

If you’re looking for a basic life insurance policy with the option to grow in the future, it may be a good option for you to buy term life conversion rider life insurance.

Changing your term life insurance policy to a permanent policy allows you to grow financially while skipping the underwriting process.

Term conversion riders are also good for those who have worsening health since your current health likely won’t have an effect on the permanent policy or your ability to convert.

While your future health can be hard to predict before you buy a term life policy, you can still take advantage of the conversion option if you already have a policy.

However, before deciding to convert your policy, you should consider several factors like the available permanent policies, your goal in converting, and what you can afford.

Would you like help finding affordable term conversion rider life insurance rates? Enter your ZIP code into our free quote comparison tool below to find companies near you.