What does convertible term insurance mean?

Question

I have two questions:

1. What does convertible term insurance mean?

2. Is there a term insurance that allows you to pay the same premium forever? Example: My age is 25, my premium at this age is $80/year. Can I still pay the $80/year even if I already 65 years old and older?

Answer 1

It means that you can convert it to some permanent life insurance at a future date without having to prove insurability.  Let's say you take out a policy now that will last till your age 65, but once you are 64, you realize that you still need the coverage for 7 more years.  Getting new coverage might be hard if you just had a heart attack or were diagnosed with prostate cancer recently.  If your policy is convertible, you have a solution to that "what if" scenario.  Most of the competitive companies throw this on their policies for free.

Yes, but it's not called term insurance.  Also because the risk would be higher to the insurance company (covering you for a longer period of time), the premiums will be higher.  Ask a few different independent agents this to get multiple perspectives.  There are permanent life policies that emphsize duration and premium over cash value.

Answer 2

1) Usually, an agent of whole life products will come in and sell a term contract to someone who asks for it. What that person doesn't ask for is the convertible part. When your policy comes up to renew, INSTEAD of renewing to term it renews to whole life, with premiums at the current age.

2) You are talking about level term insurance. You are correct that if you get a level term policy, your premiums will not increase during that term. Once it is ready to expire, your company may send a letter asking if you intend to keep the policy. If you do, you may NOT need to requalify for the insurance. Any company that offers this can be a good company to go with.  For your example- no. Most lengths of term insurance goes to a max of 30 years. My company offers 35. If you were with me, we could take you to 60 and you would only pay the $80/month. At 60, if you wanted to extend, you WOULD NOT need to requalify medically but your premium would go up based on attained age. Even if you were terminally ill at 60, you would AUTOMATICALLY receive the same amount of coverage and would only have premium go up based on age, not health.

I would suggest a policy that covers you until 65- whatever that length will depend on present age. Be sure that you are covered 8-12 times your annual salary adjusting up or down for kids in house (college ed paid for), pay off mortgage, and funeral expenses. Be sure you can have ONE policy that covers the entire people in the household- you save on policy fees (about $75/year) by doing this.  And be sure that the policy is GUARANTEED RENEWABLE- no medical tests again.

Hope this helped.

Answer 3

Yes there is a term insurance company that'll alow you to pay your premium at the rate you are at age 25 for 35 years so you'd be 60 before you'd have to renew.

So you would pay for 35 (only company offering 35 is Primerica Financial Services) years the same premium as if your were still 25.

We all know with age comes sickness so you want to lock in your premium at a young age.

BTW....with Prmerica its automatically approved if you decided to renew your policy at the age 60 (35 years)

You will be charged for the going rate of a 60 year old without any medical questions. Covering you up to the age of 95.

But if you start to invest your money now, which your young enough to do, you wouldn't need life insurance at 60 years old.

Rule of Thumb: Life Insurance doesn't have to be paid FOR YOUR WHOLE LIFE.

Answer 4

"Convertible Term" means you can convert the policy to a whole life product at any time, at the current rate for your age. There are very few times this is an advantage.

If you buy the term policy with a disability waiver, you won't need an expensive (rip off) like whole life.

Whole Life Insurance for most, makes no sense after age 65 (or sometimes after your house is paid off & the kids are out  of college).

Don't ever think of a life insurance policy as an investment. It never is.

Consider a five year renewable term policy or better yet a 30 year life certain (or both, laddered).

Paying for life insurance forever (except for tax purposes by the extrealy rich) is only a beneifit to the sales rep. and the insurance company.