Short answer
Most term policies include a conversion privilege that lets you move some or all of the coverage to a permanent policy from the same insurer without a medical exam, as long as you convert before the deadline in the policy, often the end of the level term or a set age. The new premium is based on your age at conversion, not your health.
Key takeaways
- Many term policies let you convert to permanent coverage without a medical exam or health questions.
- Conversion deadlines vary and are often tied to a number of policy years or an age limit.
- Your new premium is usually based on your current age and your original health rating.
- You can often convert part of your coverage and keep the rest as term.
- Converting often makes the most sense when your health has declined.
What a term conversion option is
A conversion option, sometimes called a conversion privilege, lets you exchange a term policy for permanent coverage from the same insurer. You do not have to prove you are still healthy. That matters if you have developed a condition, such as heart disease or diabetes, that could make new coverage costly or hard to get.
Most insurers limit which permanent products you can choose. The list may include whole life, universal life or both. Many policies also let you convert only part of your coverage. For example, you might convert enough for final expenses and keep the rest as term while your family still depends on your income.
Find your conversion deadline
The right to convert often ends before the term does. Many policies set a deadline based on a number of policy years, an age such as 65 or 70, or whichever comes first. Others allow conversion until the level premium period ends. Look in these places to find your exact deadline.
- The conversion section of your policy contract
- The policy data page and any riders
- Annual statements and letters from your insurer
- Your insurer's customer service line or online account
How your new premium is set
Your permanent premium is usually based on your age when you convert. Most insurers also use the health rating from your original term policy, even if your health has changed since then. Permanent coverage costs much more than term for the same death benefit, because it is built to last for life and often builds cash value.
A few insurers let you convert at your original age if you pay a lump sum to make up the difference. Riders, such as waiver of premium, may not carry over to the new policy. Because you give no new health information, many converted policies do not start a new contestability period. Ask your insurer how it handles each of these points.
When converting makes sense
Converting often makes sense when you still need coverage and your health has changed. Since no exam is required, it can lock in lifelong coverage you might not qualify for elsewhere. It may fit less well if you are healthy, because a new policy could cost less. You may not need it at all if your need for coverage will end when your term does. People often convert for one or more of these reasons.
- Your health has declined since you bought the term policy
- Your term policy or your conversion window ends soon
- You want coverage for final expenses or to leave an inheritance
- You support a family member who will need help for life
- You want a policy that builds cash value
How to convert your term policy
The process usually takes a form and a first payment. In most cases, your term coverage stays in force until the permanent policy takes effect. Start well before your deadline, because illustrations and paperwork can take a few weeks. An independent licensed agent can review your policy at no cost and compare a conversion with new coverage.
- Confirm your conversion deadline and which permanent policies you can choose.
- Ask your insurer for illustrations showing the premium, guarantees and cash value at different coverage amounts.
- Decide how much coverage to convert and how much term to keep, if any.
- Complete the conversion form and review the beneficiaries on the new policy.
- Pay the first premium so the permanent policy can take effect.
- Keep your term premiums current until you receive written confirmation of the conversion.
Frequently asked questions
Do I need a medical exam to convert term life insurance?
No. A conversion option lets you move to permanent coverage without a medical exam or new health questions, as long as you act before the deadline. The insurer usually keeps the health rating from your original policy. This is why converting can be valuable if your health has changed since you first applied.
Can I convert only part of my term life policy?
Often, yes. Many insurers allow a partial conversion, so you can move some coverage to a permanent policy and keep the rest as term. There is usually a minimum amount you must convert, and the remaining term coverage may have a minimum too. Check your policy or ask your insurer which rules apply to you.
What happens if I miss my conversion deadline?
Once the deadline passes, you generally lose the right to convert without proof of good health. Your term coverage continues until it ends, as long as you keep paying. To get permanent coverage after that, you would need to apply for a new policy and qualify based on your health. Mark your deadline on your calendar now.
Can I convert life insurance from my job?
Many group life plans let you convert to an individual policy when you leave your job or lose eligibility. You usually must apply within a short window, often 31 days after the group coverage ends. You do not need to prove good health, though the premiums can be high. Some plans also offer a portability option that may cost less.
Is converting term life to whole life a good idea?
It can be, depending on your health, your budget and how long you need coverage. Converting often fits people whose health has declined and who want lifelong protection. If you are healthy, a new policy may cost less. Compare the converted premium with your other options, and make sure you can keep up with the payments.
Related guides
- Term vs. Whole Life Insurance: Which One Fits?
- How Life Insurance Cash Value Works
- Is Your Life Insurance Coverage Still Enough?
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