Insurance FAQ’s: What does it mean to convert a life insurance policy?
When it comes to life insurance policies, there’s an option that often gets overlooked but holds immense value – converting your policy. But what does it mean to convert a life insurance policy?
Essentially, converting a life insurance policy refers to the process of changing the type of policy you hold. More specifically, it involves converting a term life insurance policy into a permanent life insurance policy, such as whole life or universal life insurance.
So why would someone consider converting their life insurance policy? Well, the answer lies in the benefits and flexibility that permanent life insurance offers. Unlike term life insurance, which only provides coverage for a specific period of time, permanent life insurance provides lifelong protection. This means that as long as you continue to pay your premiums, your loved ones will receive a death benefit when you pass away, regardless of when that may be.
Additionally, permanent life insurance policies often come with a cash value component. This means that a portion of your premium payments goes towards building cash value over time. This cash value grows on a tax-deferred basis, meaning you won’t have to pay taxes on its growth until you withdraw it.
Converting your life insurance policy can also be beneficial if your needs have changed over time. For example, if you initially purchased a term life insurance policy to protect your family while they were dependent on your income, but now find yourself in a more financially stable position, converting to a permanent policy can ensure that your loved ones are still financially protected after you’re gone.
Life insurance rates increase with age, so converting as soon as you are eligible, you get the lowest price possible. Converting also means that you can buy with no additional underwriting, no medical exam and no health questions to answer.
Here’s what you get if you convert to a permanent policy:
• A competitive rate that is locked in forever
• Ability to accumulate cash value
• Coverage that’s guaranteed for as long as you pay your premiums
It’s important to note that converting a life insurance policy typically comes with certain conditions and requirements. For instance, there may be a specific conversion period during which you can make the switch. Additionally, the cost of a permanent life insurance policy is generally higher than that of a term policy, so it’s essential to consider your budget and financial goals before deciding to convert.
If you find yourself in a situation where you’re considering converting your life insurance policy, be sure to consult with a insurance professional (like Holley Insurance!) who can guide you through the process and help you make an informed decision.
A little more about Holley Insurance…
Holley Insurance was founded in 2000, and retains a core base of loyal clients. We have locations in Roanoke, Rocky Mount, and Forest, VA. As an independent insurance agency, Holley Insurance represents a carefully selected group of financially strong, reputable insurance companies. Therefore, we are able to offer you the best coverage at the most competitive price. If you’re interested in starting a quote online or having us take a look at your current policies, click here.