Here are some considerations to help you determine if a term-to-permanent insurance conversion is suitable.
There are many types of life insurance policies that can protect you and your family. Term life insurance is perfect for younger people who want affordable coverage. Whereas permanent life insurance has primary living benefits for those who may wish to take advantage of those perks now. Here are some considerations to help you determine if a term-to-permanent insurance conversion is suitable.
What to Know About Term Life Insurance
Term life insurance policies are often more cost-effective than permanent ones due to their lower premiums and flexibility. These coverages can last for 10, 20, or 30 years. Some term life products may have unique riders, such as donating one percent of the death benefit to any qualified charity the policy owner chooses.
Benefits of Permanent Life Insurance
Like whole life, permanent life insurance can be an option for those seeking life insurance coverage with additional benefits beyond conventional death benefit protection. When picking permanent life insurance, you typically have a choice between universal life and whole life. For example, the crucial purpose of life insurance is to ensure the beneficiaries obtain an income (tax-free) death benefit after the policy owner passes away.
While term life insurance pays beneficiaries after your passing, that coverage term can terminate first. This is when a term-to-permanent life insurance conversion occurs. The benefits of a permanent life policy include providing cash value to help fund the following possibilities:
- Education for you or a dependent
- Your retirement
- A gift to a family member
- College savings
- A new home or home improvements
- Charity donations
Even though permanent life coverages are more expensive than a term life insurance plan, they will protect you for life. You will also obtain additional benefits during your lifetime. You should also consider your income when shopping for a life insurance policy. If that means completing a term-to-permanent life insurance conversion, then you might still receive the benefits of that conversion.
Converting from Term to Permanent
Finalizing a term-to-permanent life insurance conversion indicates converting all or part of your term life insurance into permanent policies. As your income boosts and your protection changes, your life insurance strategy can evolve with you.
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