How Locking In Term Insurance Early Is Ideal For Converting To Permanent Life In The Future
Locking in term insurance is ideal for converting to permanent life in the future because it allows you to lock in your insurability and premium rates at a young age, when you are most likely to be healthy.
Term life insurance provides coverage for a specific period of time, typically 10, 20, or 30 years. After the term expires, the policy ends and you no longer have coverage. However, most term life insurance policies have a conversion feature, which allows you to convert your term policy to a permanent life policy before the term expires, without having to undergo a new medical exam.
This conversion option is valuable if you develop health problems after purchasing your term life insurance policy. If you convert your policy while you are still healthy, you will be able to lock in your insurability and premium rates. This means that you will be guaranteed coverage, even if you develop health problems later in life.
In addition, converting a term life policy to a permanent life policy can be a more cost-effective way to purchase permanent life insurance than buying a new policy from scratch. This is because your conversion premium will be based on your age and health when you purchased your term policy, not on your age and health when you convert.
Here is an example of how locking in term insurance can be beneficial for converting to permanent life in the future:
- John purchases a 20-year term life insurance policy at age 25. He pays a monthly premium of $100.
- At age 40, John decides to convert his term policy to a permanent life policy. He is still healthy, so he is able to lock in his insurability and premium rates at age 40.
- If John had purchased a new permanent life policy at age 40, he would have paid a higher premium because he is older.
Overall, locking in term insurance can be a great way to ensure that you have access to affordable life insurance coverage in the future. If you are considering purchasing term life insurance, be sure to ask about the conversion feature so that you can understand your options.
