Understand Convertible Term Insurance

Over time, term insurance plans have developed to provide extra perks with high life cover in exchange for affordable premiums. Nowadays, people opt for convertible term insurance plans instead of basic term plans because policyholders are allowed to turn their regular term plan into a permanent life insurance policy. To understand Convertible term insurance plans, take a look at the example below.

• Let's suppose you wish to turn your basic term plan into ULIP or a permanent life insurance plan after three years of buying the policy.
• In that case, if you're holding convertible term insurance, then you're eligible to do so without any hassle.

What Is a Convertible Term Plan?

A convertible plan is a type of life insurance that allows policyholders to switch a basic term plan into a whole life or a life-long term insurance policy. Some of you may be aware that term plans only provide cover for a specified period.

Please note that the T&Cs to convert term plans may vary from insurer to insurer. However, one of the best aspects of convertible insurance is that the insured person doesn't have to do the medical test again to convert the term plans.

How Convertible Insurance Works

When a policyholder decides to switch their convertible insurance, the permanent policy will have the same value as the term policy. Even before conversion, the convertible insurance will be more expensive than a term insurance policy for the same amount of life cover. There is a built-in cost for the option of being eligible to make the conversion without a medical test. However, the best aspect of holding a convertible policy is that the policyholder doesn't have to do paperwork again to convert the policy. While switching convertible term insurance into whole life insurance, you won't have to pay a fee, but you can expect increased premiums after conversion.

What is the Conversion Deadline for Convertible Insurance

A convertible insurance policy allows an insured person to switch the plan during a pre-decided number of years. You can decide when to opt for conversion between the pre-decided window. If you forget to convert your policy to other insurance under this window, you'll forfeit the right to alter your plan. However, the rules and conditions may vary from insurer to insurer, so before making any decision, check your policy to see the deadline.

Key Features of Convertible Term Insurance

Convertible term insurance is just a regular term plan with a feature of conversion. When you buy a convertible term plan, you can enjoy some key features of the plan.

Convertible VS Renewable Term Insurance

A convertible term life insurance plan allows policyholders to switch their plans into basic life insurance policies or endowment plans in the future. On the other hand, renewable-term insurance allows the policyholder to renew the policy term and extend their life cover. However, these plans do provide extra sum assured, but they do not typically offer any maturity benefit.

Conclusion

Convertible insurance comes with a key feature to modify your future coverage without worrying about possible changes to your health. It may cost more than a basic term plan, but it's worth it because it also covers the cost of switching to a permanent policy. Talk to our insurance experts to briefly understand convertible insurance costs and flexibility before making any decisions.

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