Most Americans understand the functions of a term life insurance policy, but many may not know how it can save them money when they convert their policy to a plan that provides coverage for a longer period of time with term life conversions.
A standard term life insurance policy provides coverage for a set period of time, usually between one and 30 years, and only pays if a death occurs during the policy period, according to the Insurance Information Institute.
Some term life insurance policies have a guaranteed conversion provision that allows a policyholder to purchase a new cash-value policy at the same insurance rates that would be charged to a healthy individual of the policyholder’s sex and age, reports Cincinnati.com.
State Farm has additional information about converting term life policies on their website.
This provision can be especially beneficial to policyholders with medical problems, as they will not be forced to undergo a physical examination to gain coverage, the website reports. However, most conversion policies enforce a maximum age at which a policyholder is allowed to convert, usually 70 years old, according to Cincinnati.com.
Term life insurance policy holders interested in this option should consult with their insurance company to make sure they offer this service.