Experienced Insurance Broker Explains Term Conversion
As an experienced Insurance Broker, I often get questions from clients about term conversion for life insurance. Most of us, when we start out, simply by the amount of need we have, and our inability to pay much higher premiums is a term insurance policy. A term insurance policy is going to cost less money to start out than a permanent type of plan. However, your situation may change in the future where you don’t just want a death benefit, you also want living benefits. You want to be able to put money into the policy and there are many tax advantages to putting money inside of the life insurance policy.
The term conversion allows you to take that term insurance policy and convert it to a permanent plan. The good news is you will never have to take a blood or medical test for this. Also, your initial rating classification will follow through to the whole life or permanent plan. They may also give you back some of the money that you spent on the term insurance and give you a credit going into your cash value plan. Additionally, you can convert part of your term, so let’s say you started out with $3,000,000 of term insurance because that was your need, but you only want to convert $1,000,000 of the term. You could continue the $2,000,000 as term insurance and you could convert the other $1,000,000 for other needs such as college education or retirement supplement.
If you have questions about term conversion for life insurance, contact our professional Insurance Brokers for guidance. Let our skills work for you.
This educational blog was brought to you by Insurance Broker Michael J. Bruno, seasoned Chartered Financial Consultant, Chartered Life Underwriter and Registered Health Underwriter. Specializing in financial planning and life insurance for physicians and dentists for over 30 years.