Why Should We Convert Term Life Insurance to Whole Life Insurance?

Usually, the policyholder decides to convert his term life policy into a permanent one or extend the policy because he still needs the insurance coverage from the policy, or he may want to build the cash value that the Whole Life Insurance Policy. But do you think just the two above reasons are enough to let people make these critical decisions?

Spend only 5 minutes on reading this article to find out more thoroughly all the reasons behind the life insurance conversion:

The first reason

‘I outlived the last insurance policy, so the idea of extending it or converting a Term into Whole Life Insurance one pops up in my mind. Why do I have to pause buying the insurance service while it provides me the assurance I need?’

Note:

Term Life Insurance is the type of Life Insurance that guarantees to pay the insured coverage during a specific period. It can be 10, 20 or 30 years. People often choose Term Life Insurance because it is suitable for their tight budget.

On the contrary, if the policyholder pays the premium on time as specified in the contract, a Whole Life Insurance policy can help to protect you against the risk of death forever. In return, the policyholder is expected to pay a higher premium.

The second

‘I still need to have funds to cover the expenses related to me, such as my own funeral expense. I do not want to bother them with these final expenses.’

The third

‘Having the next life insurance policy is the way for me to leave an inheritance to my beloved ones after I die. I know that it cannot be as much as the inheritance from a wealthy family, however, this way of thinking gives me the peace of mind that my children can use the sum assured to achieve their dreams more easily, the sum assured paid out by the company insurance can act as a tuition fee when they join universities, or it can act as a living expense for my whole family for many years.’

The fourth

You are still the breadwinner of your family; another way to say this is that your beloved ones are still relying on you financially. We know that this is not what you plan for but do not worry, this is life! ‘We can’t plan life. All we can do is be available for it.’ In this case, a life insurance conversion is a tool.

The fifth

Recently, you have had some unexpected outstanding debts, so that life insurance is an excellent choice to assure that you certainly will not leave your beloved ones alone with these exceptional debts when you pass away in case the debts are not settled yet. The sum assured from the life insurance you continued will help you to protect your family!

The sixth

No underwriting is required when you decide to convert term life insurance into a permanent one, except for exceptional cases. The underwriting process is the term used to describe the process in which the insurance company evaluates the life insurance applicants, from their age, health, hobbies to their financial status, to give the decision whether the applicants should be covered by the life insurance they have applied or not; if yes, how much the cost is worth. The underwriting process is generally involved with a general assessment of your lifestyle and a medical exam.

Therefore, the sixth reason is often involved with people with health problems. The ones with health problems may have to pay a costly premium when they decide to buy a new life insurance policy because it is a must that they have to go through a medical check. 

However, for those still healthy, please consult your insurance broker about the price of a new whole life insurance policy to compare.

The seventh

‘I want to enjoy the privileged access to cash value from the whole life insurance policy, while I cannot have this benefit when I still take part in a term policy.’ 

If you have read the article about Whole Life Insurance, you may know that cash value access is one of the enormous benefits of this type of insurance. With this cash value access, you can withdraw or borrow money from the cash value. You can also build savings!

The last reason

‘I have more money now so that I can afford it.’

Many people decided to opt for a 10-, 20- or 30-year Term Life Insurance at first because they had a tight budget. Permanent life insurance, including whole life policy, is much more expensive compared to a term policy. Now time flies, their financial conditions are much better, so it makes sense to convert to a more ‘luxury’ and beneficial one. The whole life insurance can guarantee the insured lifelong protection while the term life insurance policy does not.

Read more: Term Life Insurance vs. Whole Life Insurance: What’s the difference?

Things to remember

Life insurance conversion is not an easy decision that you can make immediately. Our advice is that you should take into account this privilege even before you buy the term life insurance and check with your insurance company the following criteria:

1. Is this term life insurance convertible?
2. When is the deadtime to convert this term life insurance into a permanent one? (Please take note carefully)
3. What are all the options of permanent life insurance policy available for me to convert later?

Does any reason mentioned above for life insurance conversion match with your intention or situation at present? Comment below so that we will have a chance to support you case by case.

And do not hesitate to reach out to the trustable insurance brokers in Canada like Best Insurance Online or Life Insurance Quote for the updated insight about all Life Insurance products!

Frequently Asked Questions