Life insurance policies offer a valuable but often overlooked option - the ability to convert your policy. But what exactly does it mean to convert a life insurance policy?
Essentially, converting a life insurance policy refers to the process of changing the type of policy you hold. More specifically, it involves converting a term life insurance policy into a permanent life insurance policy, such as whole life or universal life insurance.
Why would you want to convert your insurance policy?
As your family evolves and circumstances change, it is common to find that your current life insurance coverage no longer aligns with your needs. You might be interested in a permanent life insurance policy instead of the term policy you originally purchased.
For instance, if you initially purchased a term life insurance policy to safeguard your family while they were dependent on your income, but now find yourself in a more financially stable position, converting to a permanent policy can ensure that your loved ones remain financially protected after your passing.
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Unlike term life insurance, which only provides coverage for a specific period of time, permanent life insurance provides lifelong protection. This means that as long as you continue to pay your premiums, your loved ones will receive a death benefit when you pass away, regardless of when that may be.
Additionally, permanent life insurance policies often come with a cash value element. This means that a portion of your premium payments is allocated towards building cash value over time. This cash value grows on a tax-deferred basis, allowing you to defer taxes on its growth until you choose to withdraw it.
What to consider before converting a life insurance policy
It's important to note that converting a life insurance policy typically comes with specific conditions and requirements. For example, there may be a designated conversion period during which you can make the transition. Additionally, the cost of a permanent life insurance policy is generally higher than that of a term policy, so it's crucial to consider your budget and financial goals before deciding to convert.
This is a decision that should be carefully thought through based on your current and future financial needs. If you find yourself contemplating the conversion of your life insurance policy, let Blue Marsh help you make an informed decision!
A little more about Blue Marsh Insurance...
When he founded Blue Marsh, Tom Davenport wanted to create a different kind of insurance company. One that’s built on personal relationships and a local presence. One where you, the customer, feel more like a friend.
As an independent insurance agency, Blue Marsh Insurance represents a carefully selected group of financially strong, reputable insurance companies. Therefore, we are able to offer you the best coverage at the most competitive price.
If you’re interested in starting a quote online or having us take a look at your current policies, click here!