When it comes to life insurance, it’s helpful to have a flexible plan since everyone experiences changes throughout their lives. It’s possible to convert a limited-term life plan to a broader range of benefits through a permanent life plan. Here are points you should know about getting convertible term life insurance in Houston, TX.
Assess Why You Want to Convert a Term Policy to Permanent
Everyone has to first assess financial goals for themselves and their families when deciding on a life insurance policy. You should first consider whether you need lifelong coverage. A permanent plan pays a death benefit when you die to cover final costs, provided you maintain the policy. With a term policy, the death benefit expires when the term expires.
Once you reach a certain age or develop health problems, a life insurance plan becomes more expensive. By converting to a permanent plan, you can set fixed premiums. Another reason for converting to a permanent plan is to grow profits from underlying market investments. Over time your account builds cash value that you can use for loans or withdrawals.
Young people typically start off with a term life plan because it’s cheaper, and they haven’t yet made big decisions about their future. But once you get married and start to raise a family, future planning becomes more important. Eventually, you may decide it’s best to have a growing investment as a financial safety net, which is a good reason to shift to a permanent life plan.
A term life plan is useful if you’re on a tight budget. On the other hand, a permanent plan is more like investing equity in a home. As your account’s value grows, you can manage your finances better and have extra cash available in case of emergencies.
Benefits of Convertible Term Life Insurance
- Determine the right time to convert: Term policies that offer conversion options typically let you decide when you want to convert to a permanent plan.
- No medical exam needed: Converting to a permanent plan does not require a full medical exam. Your health when you buy the term plan and not at the time of conversion will affect your costs. However, your present age will affect costs.
- Some plans allow credit toward the first-year payment of a permanent life plan upon conversion. Find out upfront if you’re available for a conversion credit and how it will impact your premium in the second year.
- You’ll get to save money on premiums for as long as you want, then convert to a money-generating account when you’re ready.
Do You Have to Convert the Full Insurance?
You do not have to convert all of your term life plan insurance to a permanent life policy. Suppose your term life plan is for $500,000 coverage. You can choose to convert half of it to a permanent life plan for $250,000 coverage while keeping the other half in the original term life plan.
In some cases, a hybrid plan split between term life and permanent life makes perfect sense. You’ll be building assets for your survivors while paying at a pace you can afford.
Doesn’t Term Life Insurance Expire?
Yes, a term life insurance plan and its set cost usually expire on a certain date. But some term plans are renewable or can be extended every year. So, you can continue to receive the same basic coverage, usually by paying a higher amount until you get into your nineties. Any rate hikes usually are due to your advancing age at the time of renewal.
Your Next Step
Finding a flexible insurance agency in Houston, TX, that allows for term life insurance conversions to permanent plans gives you a clear option for the future. Get in touch with our experienced agents at J. Archer Insurance Group today for help in getting the best life insurance for your needs. Tell us your story, and we’ll help you build a bridge to the future for your loved ones.