What is Convertible Term Life Insurance? (2025 Guide)

Convertible term life insurance allows you to convert from term to permanent coverage without undergoing additional medical examinations.

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What is Convertible Term Life Insurance? (2025 Guide)

Written by Mark Fitzpatrick

Updated: November 13, 2025

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Key Takeaways

Convertible policies include a conversion period where you can convert from term to permanent insurance without a medical reassessment. This period varies by insurer.

You can convert to permanent coverage even if you develop serious health conditions like diabetes or heart disease after buying your original policy.

Most insurers allow conversion for 15 to 20 years, giving you time to assess your long-term financial needs before committing to higher permanent life premiums.

What Are Convertible Term Life Insurance Policies?

Convertible term life insurance works like regular term life insurance with one crucial difference: you can convert your policy to permanent life insurance during a specific timeframe without taking a medical exam or answering health questions. This guaranteed conversion right protects you against future health changes.

The conversion preserves your original health classification. If you develop diabetes or heart disease after buying your term policy, you can still convert at the same rates you'd have qualified for when healthy. Convertible term life insurance gives you flexibility and future insurability protection.

How Does Convertible Term Life Insurance Work

Convertible term life insurance has a two-phase structure. Unlike regular term policies that simply expire, convertible term gives you an escape route before your coverage ends.

The two-phase approach

Convertible term life insurance works in two phases, giving you immediate affordability and future flexibility. You can secure substantial coverage at term rates initially, then transition to permanent protection when you need it.

Phase 1: Affordable term coverage (years one to 30). You pay term life rates for substantial coverage. A healthy 35-year-old might pay $40 monthly for $500,000 in convertible term coverage, just $5 more than non-convertible term.
Phase 2: Conversion option (years one to 20). Before your term expires, you can convert some or all coverage to permanent life insurance. The conversion uses your original health classification from when you first applied.

Conversion Mechanics and Timing

The conversion process affects your future premium costs, so knowing these mechanics helps you time your conversion strategically.

When you convert, your insurer calculates your permanent life premiums based on your current age, not the age when you bought the original term policy.Your death benefit can stay the same, or you might reduce it if the permanent life premiums fit your budget better. Most insurers don't allow you to increase coverage during conversion.

You’re allowed to switch from term to permanent coverage within these timeframes:

Years 1 to 10: Full conversion is available at any time
Years 11 to 20: Conversion is still possible but with more limits, depending on the insurer
After year 20: The conversion window usually closes

LIFE INSURANCE TERM CONVERSION EXPIRY DATE

The life insurance term conversion expiry date is the deadline by which you must choose to convert your term coverage to permanent insurance. Missing this date means you lose the conversion right, and you can't extend your coverage under the same terms.

How to Convert Term to Permanent Life Insurance

Converting your term life insurance to permanent coverage is easier than it sounds. Here’s what the process looks like:

1
Check Your Coverage
Look over your term life insurance policy to confirm that it includes a conversion rider. This rider gives you the option to switch to permanent coverage.
2
Select a Permanent Policy
Decide on the type of permanent life insurance that suits your needs. You might have options like whole life or universal life insurance.
3
Start the Conversion Process
Reach out to your insurance company to begin. You’ll usually fill out a conversion application and share the details you want for your new policy.
4
Review and Approve the New Policy
Once the application is approved, go through the new policy and its premiums. If everything fits what you need, accept the policy to complete the conversion.

Partial Conversion of Life Insurance

Partial conversion lets you shift only part of your term coverage to a permanent plan while keeping the rest as term insurance. For example, if you have $500,000 in term coverage, you could convert $200,000 to permanent coverage and keep $300,000 as term insurance.

This approach gives you continuous coverage while adjusting to changing financial needs. Some insurers set a minimum amount you must convert, while others don’t offer partial conversions at all.

MONEYGEEK EXPERT TIP

Watch your conversion period closely to get the most from your convertible term life insurance. This is your chance to convert to permanent coverage without a medical exam, especially before health changes could hurt your chances of getting new coverage.

Converting within this window locks in lifelong coverage at good rates.

Convertible Term Life Insurance Pros and Cons

Convertible life insurance has advantages and potential downsides. Here are the pros and cons to help you decide if it fits your needs and financial goals.

Pros of Buying Convertible Life Insurance

Adaptability

Convertible life insurance lets you modify your coverage as your needs change. Your policy stays relevant throughout different life stages.

Assured conversion

The conversion feature is guaranteed. It lets you switch to permanent coverage without a medical exam, regardless of health changes.

Accumulation of cash value

Converting to permanent coverage builds cash value, giving you an additional financial resource over time.

Potential for dividends

Once converted, some permanent policies pay dividends, adding extra financial benefits.

No risk of policy cancellation

As long as you pay premiums, the insurer can't cancel your converted permanent policy, even if your health deteriorates.

Cons of Buying Convertible Life Insurance

Increased premiums

Permanent life insurance costs more than term policies, which could strain your budget.

Limited conversion window

You can only convert during a specific timeframe. If you miss this window, you lose the chance to convert and may need to buy new coverage at higher rates.

Limited conversion options

Your insurer may limit which permanent policies you can convert to.

Is Convertible Term Life Insurance Worth It?

Convertible life insurance works well for several situations. Consider it if:

You provide for dependents

If dependents rely on your income, convertible life insurance gives them financial support if you die. Since you can convert to permanent coverage, you get lifelong protection.

You have outstanding debt

If you have significant debts like a mortgage or student loans, convertible coverage ensures these debts get paid if you die, protecting your loved ones from financial burden.

You want coverage, even if your health changes

The conversion option lets you switch to permanent coverage without a medical exam, keeping you covered even if your health declines.

You're not sure how long you'll need coverage

Convertible policies give you flexibility. Start with term coverage and convert when it makes sense.

You're concerned about renewal costs

Worried about rising renewal costs for term policies? Converting can lock in permanent coverage before rates increase.

Alternatives to Convertible Life Insurance

If convertible life insurance doesn't fit your needs, here are other options:

Level term life insurance: This policy covers you for a set period at constant premiums. Good for people who want stable payments and coverage for a specific timeframe, like a mortgage term.
Decreasing term life insurance: The death benefit drops over time. It works well if your financial obligations decrease, like parents whose children will become financially independent.
Permanent life insurance: Buy permanent coverage directly if you want lifelong protection and cash value growth. Options include whole and universal life insurance.
New term life policy: If your situation has changed, get a new term policy tailored to your current needs.
Burial insurance: Simple, affordable coverage for final expenses. Covers funeral costs and related expenses.

Convertible Term Life Insurance: Bottom Line

Convertible life insurance lets you start with term coverage and later switch to permanent protection without additional medical exams.

Understanding convertible policies can help you decide if one fits your financial plan. The conversion option helps if you think your financial needs or health might change and you want continuous coverage.

Compare quotes from multiple insurers to find the best policy for your situation.

Convertible Life Insurance Policy: FAQ

Common questions about convertible life insurance:

How do I know if my term life insurance policy is convertible?

Check your policy documents for a conversion rider or clause. If you're unsure, contact your insurance company or agent for details about your conversion options.

Are there fees when you convert term life to permanent life insurance?

Most insurers don't charge conversion fees, but your premiums will jump. Your new permanent policy costs much more than your original term policy because it lasts your whole life and builds cash value. Converting without a medical exam usually saves money compared to buying new coverage if your health has declined.

Review the new policy details and premium changes carefully. Make sure the new premiums fit your budget and financial goals.

What if I outlive my convertible term life insurance?

If you're still within the conversion period, convert to permanent coverage to keep protection. If the period has expired, you'll need to buy new coverage.

Can whole life insurance be converted to term?

No. Whole life gives you lifelong coverage and cash value, which term insurance doesn't have.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

He writes about economics and insurance, breaking down complex topics so people know what they're buying.

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