In today’s post, I would like to focus on a contractual provision of term life insurance contracts. In today’s marketplace most of the major carrier’s term insurance contracts have a contractual provision called the “conversion option”. In its simplest form, this provision allows the policy owner to exchange his/ her term life policy for some form of permanent life insurance coverage without medical evidence of insurability.

The consideration is that not all conversion options are created equally and their language can differ substantially. The following are things that we consider when comparing contracts:

1. How many years / what age you may convert the contract to permanent coverage

2. What types of permanent coverage you are allowed to convert to in the carrier’s portfolio of products

For example, certain carriers only permit you to convert for the first ten years of the policy, some carriers for the full length of the term, while others may restrict the conversion to a specific age (such as 65 or age 70).

While these differences seem subtle at the onset of policy during the purchasing phase of the process, for longer term planning and flexibility, they can prove to be quite substantial.

We at Greenberg, Wexler, & Eig take pride in paying attention to the details for our clients. Contact us today to find out more information about converting your existing term life policy.