Pros and Cons of Convertible Term Life Insurance

Convertible term life insurance is a type of term life insurance policy that allows you to convert from term life insurance to permanent insurance before the expiration of your coverage. If you are looking to make the switch to this life insurance policy, it is crucial you know its pros and cons.

Pros of convertible term life insurance

Its entry fee is low: One significant advantage of the convertible term life insurance is the low entry price you enjoy when you purchase this policy.

Death benefit is free of income tax: The government does not tax the death benefit paid to your beneficiary under convertible life insurance.

It protects insurability: The convertible term life insurance protects your insurability as that it allows you to convert to a permanent life insurance policy without submitting proof of insurability.

Cons of convertible term life insurance

Age limit restrictions: There’s always a ceiling set on the limit for the age category of people an insurance company can allow to convert their policy. Most of these corporations peg their age limit between 65 and 75 years old. If you are older than this, you might be unable to convert.

Higher premium rates after conversion: When you switch, you need not go through the hassles of a new medical exam and that of qualifying for a life insurance policy. Even if you have any health challenges, you will be accepted by the insurer. However, your insurer can always increase his premium rates to cover up for this, thus jacking up the premium rates you are supposed to pay.