Term life insurance is an affordable type of life insurance for many people, especially those who know they won’t need coverage later in life. You buy term life to cover a specific period, usually 10, 20 or 30 years, and your beneficiary would receive a payout if you were to pass away during that time.
Many people buy this coverage to financially protect their children from any debts, mortgage or medical bills they would leave behind. But what happens if you need coverage longer than expected
Converting your term life insurance to a permanent policy not only offers extended financial protection, but you will gain many additional benefits when you make the switch. Read on to learn why you should consider converting policies.
Coverage lasts the rest of your life without expiring
With permanent life insurance, you can rest easy knowing that your beneficiary is guaranteed to benefit from your policy. While term life is more affordable, you will most likely outlive your policy, therefore your beneficiary would not secure the necessary financial protection they would need to carry on without you.
Permanent life offers secure coverage for a lifetime; in some cases, you could cash out your policy or you can simply leave the funds available for your beneficiary when you pass away.
Access cash value savings during the life of the policy
With permanent life insurance, your policy includes a cash value component that grows tax-deferred over the years. After your policy has been in force for a certain period (surrender periods vary by the insurance carrier), you can access the cash within your policy.
Some policies also offer the option to cash out your policy. Keep in mind that it takes a few years for the cash value to grow substantially, so you will want to discuss your goals and plans with your insurance advisor before making the decision to access the money in your policy.
Money accrued in your cash value savings grows tax-deferred
The cash value component of a permanent life insurance policy grows tax-deferred; you can let this value increase during your lifetime or access the cash if you face a financial emergency.
Along with this, your premium payments will remain the same throughout the life of your policy, and if you have access to some extra money in your budget some months, you could put more funds into your policy’s cash value to grow tax-deferred over the years.
This can result in a more robust retirement fund for you or a significant lump sum payout for your chosen beneficiary.
Support a lifelong dependent
Permanent life insurance provides financial protection for lifelong dependents, such as a special needs child or a loved one with a critical illness.
If you know your loved one will need continued financial support for a period longer than your term life policy lasts, it’s a good idea to convert your policy soon. As life insurance premiums increase with age, you will secure the most affordable rate when you get a policy (or convert your current policy) sooner rather than later.
After you pass away, your loved one will have access to the payout of your policy, giving them the support they need after you’re gone.
Get a permanent life insurance policy in place today
Permanent life insurance offers lifelong coverage, flexible premium payment options and a cash value savings component – as well as lifelong peace of mind for your family and finances.
Quility’s insurance advisors can get you the best rates for permanent life insurance by shopping more than 80 of the top life insurance companies.