The Term Life Insurance Convertible

Today we’re going to talk about some provisions of the term life insurance policy that many people have.

Convertibility

Convertibility and the conversion privilege allow an individual who has term life insurance to change or convert that policy without evidence of insurability. That means that if your health changes, you can still make the change from the term life insurance to a permanent form of life insurance, most likely a whole life or universal life policy.

Waiver of Premium

Waiver of premium is a provision in the term life insurance policy that will allow premiums to be waived in the event of a disability.

Recently, we had a disabled client that owned a term life insurance policy with a convertibility feature from a really good company, that also has quality permanent whole life insurance. The provisions of the term policy allowed them to:

• Waive the premiums for the term life insurance
• Convert the policy from term life insurance to permanent life insurance. (The premiums for the more expensive cash value permanent plan would also be waived.)

Unfortunately, this particular client is permanently disabled, so choosing to buy term life insurance from a quality mutual company, that had both the waiver of premium and the convertibility feature, was a good decision.

Many people choose term life insurance policies that don’t have these features and are therefore less expensive. But under this circumstance, under this fact pattern, the difference is day and night. This person, instead of temporary life insurance, is going to have life insurance for the rest of his life. Because of the Waiver of Premium, the premiums for the whole life insurance policy will be paid by the insurance company, and there will be cash value available for him to use throughout his lifetime.

When shopping for term life insurance, consider these factors, because it can be make a substantial difference in the quality of your life. If you have any questions, give us a call at 516-682-3339, or look us up on the web at Strategic Wealth Advisor Network.