Term Conversion Rider

ByNathan Paulus
Edited byRae Osborn

Updated: November 30, 2023

ByNathan Paulus
Edited byRae Osborn

Updated: November 30, 2023

Advertising & Editorial Disclosure

A term conversion rider lets you change your term insurance to permanent life insurance before the term ends. This insurance rider has the added benefit of expanding your coverage without new medical underwriting, which is beneficial if your health has declined. However, using this rider to convert your term insurance to a permanent one will increase premiums.

  • A term conversion rider allows a seamless transition from term to whole life insurance without new medical underwriting.
  • A term conversion rider offers financial flexibility, allowing policyholders to adapt to changing personal or financial circumstances and add additional riders upon conversion.
  • The conversion process is initiated by contacting the insurance provider before the term expiry date and submitting the necessary documentation.
  • It is important to remember that converting to a whole life insurance policy will increase premiums.
  • Not all term life insurance policies come with a term conversion rider; they may require a separate purchase or endorsement.

Term Conversion Rider Definition

A term conversion rider is an optional feature in term life insurance policies, offering a strategic bridge between term and permanent life insurance. Term insurance, designed to provide coverage for a specific period, contrasts with permanent or whole life insurance, which offers lifelong coverage and often includes a cash value component. This rider enables policyholders to switch from the temporary coverage of term insurance to the extended and build a cash value benefit found in permanent policies, like whole or universal life insurance.

How Term Conversion Riders Work

Using a term conversion rider is subject to specific terms set by your insurance company, including a time frame for when you can convert your policy. The premium for the new permanent policy will usually be higher than your term policy. However, the biggest benefit of using a term conversion rider is that you will not need to go under medical underwriting to turn your term life insurance into a whole life insurance policy.

This means a smooth transition to long-term coverage, ensuring you stay insured regardless of any changes in your health. To make this switch, you must contact your insurance provider within the allowed period, complete the necessary paperwork, and agree to the new premium rates for the permanent policy.

Benefits of a Term Conversion Rider

A term conversion rider offers several benefits, including extending term life insurance and enabling a smooth transition to whole life insurance without requiring new medical exams.


Factors to Consider Before Using a Term Conversion Rider

You must thoroughly assess a term conversion rider's financial implications, understand the conversion process, and explore the additional coverage options available before utilizing it. This ensures a well-informed decision, aligning with your long-term insurance needs and financial goals.


How to Convert a Term Life Insurance Policy from Term to Permanent Coverage

Converting your term life insurance policy to permanent coverage using an insurance rider involves several straightforward steps. Let’s take a look:


Review Your Policy

Review your term life insurance policy for a term conversion rider and comprehend the specifics like the conversion timeframe, the new premium rates post-conversion, and any additional requirements or options such as added riders or features available upon conversion.


Contact Your Insurance Provider

Contact your insurance provider to let them know you intend to convert your term policy to a permanent policy.


Submit the Necessary Documentation

Submit the necessary documents your insurance provider requires to initiate the conversion process, typically including but not limited to a completed conversion application form and proof of identity.


Review the Conversion Terms

Understand the conversion terms, including the new premium amounts, coverage details, and additional riders available.


Receive and Confirm Your Updated Policy Documents

Get the updated policy documents from your insurance provider, reflecting your new whole life insurance coverage.

Frequently Asked Questions About Term Conversion Riders

Learn more about the nuances of a term conversion rider through these frequently asked questions and how they bridge the gap between term and whole life insurance.

A term conversion rider is an add-on to a term life insurance policy that allows you to convert it to a whole life insurance policy without undergoing new medical underwriting.

The conversion can be done within a specified timeframe outlined in the rider, usually before the term policy expires.

Yes, your premiums will likely increase as whole life insurance premiums are higher than term life insurance premiums.

If you choose not to convert, your term policy will expire at the end of the term period, ceasing the coverage.

No, one of the benefits of a term conversion rider is that it allows the conversion without a new medical exam.

Related Content

Explore various types of life insurance, compare term and permanent policies, and discover the intricacies of convertible life insurance to enrich your understanding of what a term conversion rider is.

Life Insurance — This page is a robust starting point to grasp the broader context in which a term conversion rider operates, facilitating a nuanced understanding of the conversion from term to whole life insurance.

Short-Term Life Insurance — Explore the specifics of short-term life insurance and its contrast to other life insurance types. Understanding the temporary nature of short-term life insurance can provide a foundation for appreciating the longer-term coverage options facilitated by a term conversion rider.

Term vs Permanent Life Insurance — Learn the differences between term and permanent life insurance, offering a clear perspective on utilizing a term conversion rider to transition from a term to a whole life insurance policy.

Convertible Life Insurance — Learn about the differences between term and permanent life insurance, offering a clear perspective on the transformation when utilizing a term conversion rider to transition from a term to a whole life insurance policy.

About Nathan Paulus

Nathan Paulus headshot

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.