Most people should consider at least some form of life insurance. In the event of someone’s unexpected passing, there are typically a mountain of costs and financial challenges that people face trying to pick up the pieces. Life insurance offers protection for your family and those connected to you, so that they are unlikely to experience a financial burden should these challenges occur.
But there is more than one form of life insurance to consider. The cheapest and easiest form of protection is called “term life.” Term life insurance is life insurance that extends over a specific term – typically 10, 20, or 30 years. After that term is over, the life insurance expires, and you will need to obtain another type of life insurance to continue to receive protection.
What is Term Life Insurance?
Term life insurance can be inexpensive, especially compared to other life insurance options. While the costs can vary, a 30 year old in good health can often obtain a policy of $500,000 in term life insurance for anywhere from $30 to $75 per month (please remember that these numbers may vary based on a variety of factors, and that this is not considered a quote).
However, the cost of term life increases considerably the older a person is. At age 65, that same term life insurance policy can cost anywhere from $550 to $1000 per month, and some insurance carriers may not accept your policy.
What is Whole Life Insurance?
Whole life insurance is a type of “forever policy.” It does not expire at any age, nor do the premiums typically change. Some whole life insurance can be paid off within a specific time frame (for example, within 20 years) and, after it’s paid off, the individual will still have life insurance for the rest of their life even without any additional premium payments. Other forms of whole life have premiums that are ongoing, but will never expire.
Why Convert Term Life into Whole Life?
Some insurance carriers allow you to convert your term life insurance into whole life insurance, sometimes – although not always – without any additional testing or qualifications. Many policyholders choose to make this switch, especially if their financial situation has improved. That is because:
- All life insurance will get more expensive if you obtain it at a later time, so converting to whole life while younger will decrease the cost of the monthly premiums.
- Whole life insurance has an investment component that can accrue value for your family or even be borrowed against or withdrawn while you are alive.
- Whole life conversions typically integrate some of the paid premiums from the term life insurance, reducing the monthly cost compared to obtaining a new policy.
Whole life builds cash value, can be used as an investment device, and provides some additional financial security. That is why this conversion can be such a useful choice for many policyholders.
Is a Whole Life Conversion Right for You?
The choice to convert term life to whole life depends on many factors, including your own financial health (premium payments are typically more expensive) and the policy the carrier offers. The best way to find out is to contact an insurance agent near you. In Conroe, Houston, and Austin, the best agency to contact is Kaia Insurance Group. Call today to get started.