Granted there is nothing like riding around town with the top down and the air rushing through your hair. There is something special about convertibles, they make you stop and take a second look when you pass by them. They are special, but not every convertible is a vehicle. There are insurance policies that are “convertible” as well.
Convertible term life insurance policies are for people who need something that is within their budget and will afford them the flexibility a whole life insurance policy will not give them. This is an especially good way to go if your life is at a point of being in constant flux, such as couples who are just starting out and beginning their families.
The difference between term and whole life insurance is that term life insurance is like a temporary contract that you pay for monthly. If you, by some misfortune, die within the timeframe of the contract, your beneficiary collects on the insurance policy. However, if the contract expires and you do not then you will have to get a new policy, and you are out the money you expended much like you would be for your car or home insurance policy.
Whole life insurance is more like a savings or investment tool. It does not expire; it is good for the expanse of or your “whole” life as long as you keep the premiums current. As the policy matures, you can even borrow against the equity that you have accrued in it if you so choose.
A convertible term life insurance policy is a conglomeration of both. A marriage of sorts of the term life and the whole life insurance policies, because it starts as a term life insurance policy when you first purchase it so it is not as expensive. You can then change it over to a whole life insurance policy later on in life when you can better afford it.
You more than likely will have to have a medical exam of some sort done if you want to get the lowest rates for this type of insurance policy. The plus is that you will be taking the exam when you are younger and less likely to have health issues. Years later when you are more prone to have a possible complication you will not have to take the exam to convert the policy. You can switch to the whole life policy, with the same amount of coverage as your term life insurance policy without having to discuss any type of health related issues that may have come up over the years.
This flexibility is what makes this type of insurance policy offer you the most wiggle room of any type of life insurance available. When you are first starting out in life, you and your spouse are less prone to have the money to afford a high premium that a whole life insurance policy will cost you each month, add kids to this equation and it becomes even tougher, but a term life insurance policy is much more affordable. Check into your policy when signing up to see if you can convert it at the end of the contract or policy life, it’s worth your family’s security.
