How To Convert Term Insurance to Permanent Insurance

Perhaps you have just married, or there is a new baby in the family. These are the times when many people start to think of all the wonderful events the future may hold, but along with that you might not be able to help but think of all the misfortunes that may befall your new family. Years ago, you might have purchased a convertible term life insurance policy, but now you want to protect your family after you are gone. If you are still within the conversion deadline, converting term insurance to permanent insurance could be an option. When converting your insurance, your premium will be higher than a term insurance plan, but your policy will build cash value, and you will not have to be subjected to a medical exam to qualify.

Before contacting your agent about a term to permanent insurance conversion, you will need to calculate some numbers, and look over your term insurance paperwork. Read over your existing policy, and review the death benefit amount. There are also a few expenses to be considered. Estimate the amount of debt that might need to be paid off after your death: a mortgage, large medical bills, and funeral costs. After adding together your possible debts, decide if what is left is enough for your beneficiaries to live on.

Contact your insurance agent, and compare the permanent insurance plans available under your term insurance conversion. Make sure you understand all the paperwork before signing; ask your agent to clarify anything you do not understand. When you receive your new policy, make sure all terms were as discussed. While you will need to keep your policy at home with your other paperwork, make sure a copy is made and placed in a safe deposit box.

When you convert your term insurance to permanent insurance, there are several advantages you will have. Depending on what type of permanent insurance you chose, your premiums will stay the same throughout your lifetime, and you can build a cash value to put toward those premiums, access the savings through a loan, or invest the building value. Also, you will not be required to pay taxes on all the money that has built in your insurance plan, nor will your beneficiaries have to pay taxes on the death benefits.


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