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Term to Perm Life Insurance Conversion Tips

Term to Perm Life Insurance Conversion Tips

October 07, 2020

There are many types of life insurance policies that can help protect you and your family. Term life insurance can be an attractive choice for millennials who are looking for affordable coverage, especially if they’re not ready to commit to permanent, whole life insurance. Even better? While with a term life policy you get coverage for a defined length of time, there are policies that can be converted to permanent life insurance for part or all, of the coverage period down the line.  Permanent life insurance also has some key benefits on its own for millennials who may be ready for additional benefits now.

Here are a few key considerations for whether a term-to-perm conversion option is a good starting point for obtaining protection for your loved ones.


These type of policies are often more affordable than permanent life insurance policies with their lower premiums and flexibility, including coverage that lasts for a specified amount of time such as a 10, 20, or 30 year term. On some term life products, unique riders2 may also be available, such as the ability to donate an extra 1 percent of the death benefit—over and above the amount paid to the designated beneficiaries—to any qualified 501(c) (3) charity of the policy owner’s choosing.3


Permanent life insurance can be an option for millennials looking for life insurance coverage with additional unique benefits beyond traditional death benefit protection. A whole life insurance policy is that it is one that doesn’t expire as long as you make your premium payments on time. Permanent insurance policies typically combine a death benefit with cash value.4,5 When choosing permanent life insurance, you typically have a choice between whole life and universal life.6, 7, 8

The primary purpose of life insurance policies is to ensure beneficiaries receive a tax-free death benefit after your passing. Having life insurance may mean it’s possible to fund opportunities or realities without tapping into an existing savings account.9 While term life pays beneficiaries after you pass, that coverage term could end first. That’s where the benefits of converting to a permanent life insurance policy come into play.

Benefits of a permanent life insurance policy include providing cash value10 to potentially fund:

  • Your retirement
  • Education for you or a dependent
  • A gift to a family member
  • Donations to charity

One key note: You may have heard others talking about how expensive permanent life insurance policies are or that they only pay funds after your passing.11 Yes, permanent life insurance policies indeed cost more than a term life insurance policy, but that is not the entire picture.

Your income should be part of the many considerations when shopping for a life insurance policy. That’s why many will look at the types of policies that are available and choose one that fits their budget. If that means choosing a term life insurance policy first and converting it later, then you can still reap the benefits of that conversion while ensuring protection today.


Permanent insurance policies offer benefits that term policies don’t, so many find that it’s helpful to use them together12. Converting from term to permanent life insurance means you’re converting all or some of your term life insurance into permanent policies, like whole life or universal life.

While most policies include the option to convert, you may be able to add it as a rider if it isn’t. So, even if you decide to buy term life insurance now, you have the option to convert it to a permanent life insurance policy later13. Because permanent life insurance is based on your income, converting from a term to a permanent life insurance policy can be an affordable option. In other words, as your income increases and your protection needs change, your life insurance strategy can change with you by potentially converting to a whole life policy later.

It can be beneficial to work with a financial professional to help as you plan for a more protected future.


Brought to you by The Guardian Network © 2020. The Guardian Life Insurance Company of America®, New York, NY

2020-105830 Exp. 7/2022