Here are a couple of considerations to help you determine if a term-to-perm insurance conversion is ideal.
There are numerous life insurance policy types that can protect you and your family. Term life insurance is ideal for younger people who seek affordable coverage. Also, permanent life insurance has primary living benefits for those who might want to take advantage of those benefits now. Here are a couple of considerations to help you determine if a term-to-perm insurance conversion is ideal.
Term Life Insurance
Term life policies are often more cost-effective than permanent life insurance policies due to their lower premiums and flexibility. In addition, these coverages last for 10, 20, or 30 years. On some term life products, unique riders might be available, like donating an additional one percent of the death benefit to any qualified charity of the policy owner’s choosing.
Permanent Life Insurance
Just like whole life, permanent life insurance can be a choice for those seeking life insurance coverage with additional benefits beyond traditional death benefit protection. You usually have a choice between universal life and whole life when selecting permanent life insurance. For instance, the critical purpose of life insurance is to ensure the beneficiaries receive an income (tax-free) death benefit after the policy owner’s passing. While term life insurance pays beneficiaries after your passing, that coverage term can end first. So, that’s where a term-to-perm insurance conversion occurs.
The advantages of a permanent life policy include offering cash value to help fund possibly:
- Education for you or a dependent
- Your retirement
- A gift to a family member
- College savings
- A new home or home improvements
- Charity donations
Although permanent life policies are more expensive than a term life insurance plan, they will protect you for life. It’s also providing additional benefits during your lifetime. Additionally, you should consider your income when shopping for a life insurance policy. If that means completing a term-to-perm insurance conversion, then you may still receive the benefits of that conversion.
Converting from Term to Permanent
Completing a term-to-perm insurance conversion indicates converting all or several of your term life insurance into permanent policies. As your income increases and your protection evolves, your life insurance strategy can change with you.
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