Term Life Conversion to Whole Life

Woman Wondering Abut Term Policy Conversion to Whole Life

Term life conversion to whole life policy is possible. Most term life insurance policies sold in the market today come with a conversion feature that lets you convert some or all of your term life insurance policy into permanent life insurance such as whole life, variable or universal.

Your reasons for buying a life insurance policy may change as you grow older.

You might find term insurance to be the best choice when you were young, but today you might need a permanent policy that covers your entire lifetime. One convenient solution is converting some or all of your convertible term life policy to whole life.

Most term life insurance is convertible.

Term policy conversions to whole life are an ideal option if you decide you want protection for the rest of your life. You may also be able to convert some of your existing term life insurance to whole life insurance to be used for burial expenses.

You can discuss with our Funeral Funds agents to investigate if this option would be best for you. If you have any questions about life insurance conversion, feel free to call us at (888)862-9456 we can help!



Term life insurance is designed to give financial protection for a specific time like 10, 20 or 30 years. The death benefit is the only benefit of this plan. When the term ends, your coverage expires.

Some insurance companies let you automatically qualify for a new term when the term expires. You don’t need to take a medical exam, however, your premium will increase (it will often increase significantly).

The drawback to term insurance is that when the term ends, your rates and coverage amount are no longer guaranteed. Most carriers will offer annual policy renewal at an increasing rate.

Features of term life insurance policies:

  • Most affordable premiums
  • Pure death benefits only
  • Only pays the benefit if you pass away within the term of the policy
  • In force for a specific term such as 10, 15, 20 or 30 years
  • You can renew the term if you want to extend coverage after the term length.
  • Rates increase as you age, rates increase depending on age band
  • Can be converted to whole life insurance

It may be impossible to qualify for a new term policy if your health has declined. To help policyholders, many life insurance carriers offer convertible term life insurance.

What is a conversion option on term life insurance? If your term policy has a conversion option, you will be able to exchange your existing term policy to a whole life policy before your current term life insurance policy expires.

Many life insurance companies don’t advertise this added benefit, but it’s a benefit worth checking. When you convert your existing term policy, you don’t have to submit to a medical exam because you’re guaranteed to be approved at your original health class.

When you convert term to whole life, your policy will then be permanent. Whole life insurance is permanent life insurance with an investment component. You are covered for life if you keep paying your premiums on time. A part of the premium covers death benefit, and the remaining amount goes to the cash value.

Features of Whole life insurance:

  • Lifetime coverage
  • Provides death benefit payout and cash value that builds up over time
  • It takes about 10 to 15 years to build sufficient cash value
  • You can borrow or withdraw the cash value
  • Available without a physical exam, but more expensive
  • Best for estate planning
  • Can be more costly than term life, but has the potential to save more money if the policy is in force in a lifetime.


There are two options available when the term period expires on your policy:

Option 1: Convert your term life to a permanent plan, either whole life or universal life. The premiums for these products are not determined since you don’t know what permanent life insurance products will be available at the time of conversion.

Before purchasing a term life plan, check these tips before you decide to convert the policy later on:

  1. Make sure your term life plan can be converted to whole life later on. Most term life policies are convertible, but you need to confirm the policy before buying.
  2. Be clear about the deadline for conversion. Convertible policies only let you convert during a specific period. The conversion must happen before the age of 65, 66 or 70 or within the first 5 or 10 years of the policy
  3. Review the conversion options available if you want to convert. Policies vary by the carrier so you’ll want to find out your options if you have to convert eventually.

Option 2: Pay an annual renewable rate. When the level term expires the premium on the policy is no longer applicable and will increase every year. You will never know the cost when you renew. There is an annual renewable premium amount in your initial contract, but it is not guaranteed to stay that way.


A term conversion means converting some or all of your term life insurance into a whole life insurance policy. This option is available if you want whole life insurance. Conversion options are typically included in your plan for free.

Term conversion can be done without considering your health condition as long as you convert before the specified deadline. It can be a certain age somewhere between 65 and 70 depending on the company.

Don’t wait too long if you want to convert your policy to whole life. Premiums are based on age, and it is bound to increase as you grow older. The longer you wait, the higher the premium you’ll pay for a whole life insurance policy when you convert.


A partial term conversion means taking a portion of your term policy and converting it to whole life. If you do this you will have one term life and one whole life insurance or two separate insurance policies.


You have a $500.000 30-year term insurance policy. You owned it for eight years, and you’re still within the 10-year conversion deadline from the company. You decide to convert $100,000 into a whole life policy.

There will be two life insurance policies: a $400,000 term policy with 22 years left, and a $100,000 permanent policy that provides lifetime coverage.

Converting a portion of your term policy to whole life will show the coverage amount left on your term policy.

For example, you were paying $55 per month for your $500,000 term policy, when you decided to convert the $200,000 to a whole life policy, your monthly premiums will then drop to $34 per month which is the premium for a $300,000 policy.

You may opt for a partial term conversion if you’re having a hard time paying the premiums for a full conversion or you don’t need the full amount to be converted to a whole life policy. Your plan should be within the minimum face amount even if you opted for partial conversion.


You have a $250,000 term policy with a minimum face amount of $100,000. If you convert $200,000 of the term to whole life policy you lose the remaining $50,000 on the policy because it is not enough to reach the minimum face amount.

Many life insurance companies will give you the option to convert your policy in different amounts at different times which helps offset the cost of converting term to whole life. It’s important to note that only some life insurance carriers allow partial conversions.


Term conversion to whole life has an expiration date. The expiration date depends on the insurance product and the company. You must convert your term policy to whole life before the expiration date. You don’t need to go through the underwriting again, but they will consider your age.

You can convert your plan based on your current age or the age when you purchased your term policy (original age).

Converting based on your current age will cost more, but you don’t have to pay a lump sum at conversion. If you convert your plan based on your original age, you will need to pay all the back premiums and interest when you convert, but the premium would be cheaper.

To illustrate:

You’re a 50 years old male, and you are converting your 25-year term insurance policy. You plan to convert based on your original age. You bought your term policy when you were 40 years old, so the carrier-based the price of your new whole life policy at age 30. Your premiums will be a bit cheaper compared to a whole life policy acquired at age 50.

When you convert, you need to pay the insurance company an amount equal to the difference between the term life policy and what the premium amount would have been if you originally bought a whole life policy.

10 years of whole life premium – 10 years of term life premium = Lump-sum due to the insurance company

Your premium may be 10-15 times higher compared to your term life policy premiums when you convert to a whole life policy. That’s the cost to convert from term to permanent life insurance. Converting to whole life will make your premiums higher because whole life insurance costs more.

But, if you need life insurance when you have health issues, converting term life to a whole life policy will likely be cheaper than to apply for a new term insurance policy.

For example:

You’re 60 years old, and you bought a term life insurance policy 15 years ago. When you bought the policy, you are rated “Preferred” because you were in excellent health. But now you have hypertension and diabetes. It will be impossible to get the same preferred rating today.

Here’s the benefit of term policy conversion to whole life: You can convert your policy to whole life at the same “Preferred” rating without submitting any evidence of insurability. So you will pay what every 60 years old in excellent health would pay for whole life insurance.


Convertible term life insurance benefits include:

  • You can have life insurance coverage for your whole life.
  • You retain your original health rating from the term policy when you convert, even if you have medical issues or become uninsurable.
  • You can decide when and how much coverage you want to convert, as long as it’s before the expiration date.
  • You can start building cash value with your new whole life policy


Here are some of the reasons why you should think about converting term insurance to whole life.

Term life expires

Consider the pros and cons of converting term life to whole life.

Your beneficiaries are likely never going to collect on your term life policy if you outlive it. Term life is more affordable because it is designed to expire and the company won’t have to pay up.

However, the insurance carrier will have to pay for a whole life policy eventually. Your beneficiaries will get the money back when you die, or you take the policy cash value.

Build savings

Whole life insurance is a tax-free savings policy for your family. A portion of the whole life insurance funds goes to the cash value, that accumulates over the years on a tax-deferred basis.

You can withdraw from the cash value or borrow against it. You also have the option to surrender the policy for the cash value. Term life policy has no cash value.

You can now afford it

Whole life insurance is more expensive, but it can be more affordable now if you’re financially well off than when you bought your term life policy. It is especially true if you developed a health problem later in life. If you’re making more money and your financial situation improved, that’s the right time to convert to a whole life policy.

Whole life is more costly than term life, but it can provide you with savings for your family to use as an emergency fund or retirement fund.

You have health issues

You are not required to have a medical exam if you convert from term life to whole life policy.

If you let your term policy lapse and then apply for another policy, you’ll need to undergo a medical exam. If you have health issues, you will likely not qualify for a policy. But, you bypass the medical exam when you convert your policy to whole life.

When you convert life insurance policy, the insurance carrier will give you the same health rating as to your term policy even if you have health issues. The insurance company will not consider your current health condition when you convert your term policy.

Lifelong Dependents

It’s your advantage to take your conversion option from your term policy to whole life if you have dependents that may need financial help after you die. A whole life policy can help fund a trust for your dependent upon your passing.

Think of the whole life insurance policy as a savings account to provide care for your dependent. It is especially true if that dependent needs financial help for care, such as if the child has special needs or medical needs.

Converting term life to whole life can leave money behind for your dependent care.

Level premium

Whole life premium remains the same for the rest of your life. Whole life insurance locks in the rate, which you will pay until you die. You don’t have to worry about rate increases in the future.

Estate planning

Term life insurance while it offers lower cost, is not ideal for things like providing for a large estate. A whole life policy is a better choice for people with a significant amount of assets who want the policy for large estate planning.

When you’re looking for estate tax shelters, the best funding source is whole life policy held in trust. It allows the proceeds to keep out of your estate when you die. The fund within the trust can be used to pay ongoing income to heirs depending on your estate planning goals.


If you’ve missed your term life insurance conversion period but you’re still in good health, you still have a few affordable options for life insurance.

If you’re 80 or younger, you can still qualify for whole life insurance options from many A-rated insurance carriers. In fact, most of the policies we offer even provide guaranteed coverage until age 120 years old. This whole life policy that allows you to lock in $5,000-$50,000 or more coverage until a set age without requiring an investment.

Guaranteed universal life policies are very similar to term insurance in a way that it offers level rates and guaranteed benefits until age 90. This policy does not carry the investment risk attributed to non-GUL, and they do not build cash value. And, this policy does not increase in premium as you get older. You pay the same premium from policy issue until age 120.


Always take the time to talk with your life insurance agent to understand the ramification of borrowing against your cash value. Never assume that because you have a permanent life insurance policy, you should borrow against it.

If you’re thinking about converting your term life policy to whole life insurance, talk to our agents at Funeral Funds to get answers to your questions about the term and whole life insurance.

Need burial insurance? Instead of wasting hours talking to different agents answering the same questions over and over again, let us do the work for you to find affordable burial insurance. Fill out the instant QUOTE form on this page, and we will give you the best rates available for final expense life insurance.

Funeral Funds is an independent insurance agency that can shop your application to many companies available. This way you can be sure that you are going to get the best carrier that favors your age and health.

We work with the top-rated life insurance companies in the United States, many of which offer immediate coverage with the lowest rates.

If you need help finding burial life insurance, please don’t hesitate to contact us at (888) 862-9456.


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