Should You Convert Term Life Insurance to Permanent?
Quick Answer: Term conversion lets you exchange your term life policy for a permanent one without a new medical exam — your health can't be used to raise your rate. Converting makes sense if your health has declined, you still have dependents, or you now want lifelong coverage and cash value. It's usually not the right move if you're still healthy (a new term policy is often cheaper) or if the higher permanent premium would strain your budget. The critical constraint: most carriers only allow conversion during a limited window — often the first 10–20 years of the term, or before age 65–70, whichever comes first.
Term Conversion: Should You Convert Term Life Insurance to Permanent? Should you convert term life insurance to permanent? A term conversion can be a valuable option — but whether it's right for you depends on your health, your budget, and how much time you have left in your conversion window. We'll explain how term and permanent coverage differ, walk through the conversion process, and cover both when converting makes sense and when it doesn't.
What Is the Difference Between Term and Permanent Life Insurance?
What Is Term Life Insurance?
Term life insurance provides coverage for a set number of years, typically for a policy length of 10, 15, or 20 years, although other contract lengths do exist. There are several types of term policies, such as level term, yearly renewable term, and decreasing term. The type of coverage you choose will depend on your financial needs.
- Level term is the most common, with a set premium and a face value that does not change.
- Yearly renewable is just that – a contract length of one year that you can continue to renew without going through the entire application process again each year. However, your premiums will become more expensive each year as you age and renew.
- Decreasing term is most associated with a mortgage, as the death benefit value declines each year as you pay a fixed premium. This can be used to ensure your loved ones are not left with a mortgage or similar expense to pay off in the event of your death.
If you want to know if you can renew or extend your term life insurance policy, you can read more here.
Your Term Conversion Deadline: Don't Miss the Window
This is the most important thing to understand about term conversion: you cannot convert whenever you feel like it. Most policies limit conversion to a specific window, and once it closes, the option is gone permanently.
Time-based windows. Some policies allow conversion at any point during the term. More commonly, conversion is only available during a limited period — often the first 10 years of a 20-year policy, or roughly 15–20 years into a longer term.
Age-based cutoffs. Many carriers set a maximum conversion age, commonly 65 or 70. Whichever limit arrives first — the time window or the age cap — is the one that applies.
The conversion option must exist from day one. A conversion privilege has to be built into the policy when you buy it. It cannot be added later. If you're shopping for term coverage now and think you might want to convert someday, tell your agent so they steer you toward convertible policies.
Practical takeaway: find your policy documents and note your conversion deadline today, well before your term expires. Waiting until the final year is often too late — by then, many conversion windows have already closed.
The main benefit of term coverage is the generally more affordable premium; however, it comes at the cost of higher risk. If you outlive your term length, you have a few options. You can:
- convert to a permanent policy
- renew your term coverage
- apply for a new policy at an older age and with any health conditions you may have developed since the start of your original coverage
These factors will all result in more expensive premiums. If you opt out of renewing or converting, you risk being left without life insurance, which may financially impact your loved ones in the event of your death. The premiums you paid are not refunded if you outlive your policy. In addition to higher risk, term life insurance does not come with the advantage of having a savings component the way many permanent policies do, limiting its impact on your financial planning. If you die within the term of your policy, your beneficiaries will receive the face value, or coverage amount, of your contract. If you are interested in reading more about what happens to term life insurance if you don’t die, you can read our article on it here.
What Is Permanent Life Insurance?
Permanent insurance is just that – coverage that lasts for a lifetime. In addition to the face value of the death benefit, permanent plans accumulate value over time due to their built-in cash value component that is tax deferred. While the premiums are higher, a portion of what you pay is put towards the savings component, which has a higher growth rate than a typical bank savings account.
There are several types of permanent policies, including whole, universal, and variable. Each type has similar components but is designed to meet different needs and comes with varying levels of risk.
- Whole life has fixed premiums, cash value growth, and a set death benefit.
- Universal life policies may have adjustable premium payments and death benefits within the parameters of your individual policy. Under the umbrella of universal coverage, there are options for fixed rate, guaranteed, indexed and variable.
The cash value component of a permanent policy adds flexibility to your coverage, as it can add to the value of your death benefit or be accessed during your life to supplement your retirement or other financial needs. Permanent insurance is an asset that can be used to create an immediate estate.
What Policy Type Meets Your Needs?
When assessing your needs, it is important to consider several factors. Namely, premium cost, long-term financial needs, and your own financial plan. Meeting with a financial advisor or life insurance agent can help you determine what coverage type meets your needs. Term protection may be best suited to your needs if you are looking for more affordable premiums and life insurance as debt protection. Term coverage can also be used to temporarily supplement your permanent death benefit if you have a large expense, like a mortgage, that you do not want to leave your loved ones with. As your dependents age, you may have less need for a death benefit. Once your children have moved out or completed college, your financial needs may change. It is important to regularly review existing life insurance policies to ensure your coverage is still sufficient and to ensure you are not paying for more than you need. If you want to know more about how much life insurance you really need, you can read our article on the subject here.
If your coverage needs change, you may be interested in converting from term to permanent coverage. Your income may rise, allowing you to afford the higher premiums of permanent coverage, or you may have children and want to ensure they will be financially provided for no matter what. There are various reasons to convert your policy. If you want to learn about how often you should review your life insurance policy, you can read more here.
How Do I Know If I Can Convert My Term Policy to a Permanent Policy?
When shopping for life insurance, it is important to consider if your goal is to eventually convert from a term to a permanent policy, as not every contract can be converted. Many providers have restrictions on what kind of permanent policy you can convert to, so communicating with your insurance agent when shopping will help ensure there are options open to you when it comes to converting. If you want to convert to coverage with a higher death benefit than your current term contract, you may need to undergo the underwriting process again. There are some carriers that allow you to avoid going through the process again by choosing a policy with a rising death benefit if available. The value of your death benefit would rise over time, although your premium will be higher than a level death benefit.
If your provider does not allow you to convert your existing policy, you may need to apply for new coverage. If this is the case, you can get a free quote from us today to compare rates. The best fit for a new policy may be with a new provider. You should not cancel your contract until your new policy is in place to ensure there are no gaps in your protection.
When shopping for coverage and planning to convert your plan, it is important to take note of any required timeframes noted in your contract. Some policies and carriers only allow conversion within a certain number of years or prior to the policyholder turning a certain age. See the conversion deadline section above for the specific windows most carriers use.
The Conversion Process Explained
Review your existing policy: make sure you are within the timeframe set by your provider to convert and review your death benefit value to ensure it meets your financial needs. It may be beneficial to meet with your financial advisor or life insurance agent to assess your needs and options.
Contact your insurance provider: alert your provider that you’d like to convert your term coverage and they will provide you with the conversion application form and request any additional information required.
Fill out the application form: as this is a conversion and not a new policy, it will not be as time intensive as the initial application you completed. Many carriers allow you to convert your coverage without a new medical examination. You may also choose to upgrade your death benefit amount during this process. It is important to consult with your financial advisor to ensure your needs are met.
Underwriting and approval: your provider will review your policy and application before approving your new coverage. Once approved, you will receive the details of your new coverage, including the new premium cost, the amount of your death benefit, and information on your cash value component.
When Term Conversion Is Not the Right Move
Conversion is a valuable option, but it isn't automatically the best one. Consider these situations where it may not make sense:
You're still in good health. Conversion prices your permanent policy at your current (attained) age, and permanent coverage costs substantially more than term. If you're healthy, buying a brand-new term policy — or shopping a new permanent policy on the open market — may be considerably cheaper than converting. Get both numbers before you decide.
The new premium would strain your budget. Permanent premiums are dramatically higher than term. If you convert and then can't sustain the payments, the policy lapses and your family is left with no coverage at all — the worst possible outcome. Confirm the exact post-conversion premium before committing.
Your need for coverage is genuinely ending. If your mortgage is paid, your children are independent, and your retirement is funded, you may simply not need life insurance anymore. Outliving your term is a success, not a failure.
You only need coverage for a defined period. If you need protection for another 10 years — not for life — a new term policy is almost always the more economical choice than a lifelong permanent policy.
A partial conversion may serve you better. Many insurers allow partial conversions. You might convert $250,000 of a $1 million term policy to permanent coverage and let the rest stay as term — capturing lifelong protection for part of your need without the full premium jump.
The honest summary: term conversion is most valuable precisely when you'd struggle to qualify for new coverage — when your health has changed. If you're healthy, always compare the conversion cost against a fresh quote before deciding.
The Benefits of Converting Your Policy
There are several advantages to converting your term policy to permanent coverage:
Save time and money: you typically do not need to undergo a new medical exam, speeding up the application process, and saving you money if you have developed any health conditions since your initial underwriting process.
Added value: even if you do not alter your death benefit amount, permanent policies accumulate a cash savings component that grows at a faster rate than money in your bank savings account. This fund can be accessed during your life to supplement retirement, education costs, and emergency expenses. It can also add to the value of the death benefit your beneficiaries receive.
No lapses in coverage: if you outlive your term contract, you will be left without insurance or going through a new application and underwriting process with significantly higher premiums at an older age with any new medical conditions. Your beneficiaries will be protected no matter what with permanent life insurance.
Flexibility: term policies are generally a set premium for a set number of years and set death benefit amount. Permanent coverage is significantly more customizable, with the ability to adjust your benefit amount and choose different premium options. Many permanent contracts allow you to pay a higher premium for several years so you can pay little to none after a set number of years.
The Bottom Line
It is essential to regularly review your financial needs and your life insurance coverage to ensure that your loved ones are protected no matter what. Converting your policy from term to permanent coverage may help you meet your financial and estate planning goals. Since everyone’s situation is different, it may help to give us a call and walk through what option is best for you. Call us at (800)521-7873 and tell us a bit about your current financial situation and your coverage needs, and we can explain your options.
Frequently Asked Questions: Term Conversion
What is term conversion?
Term conversion is a provision in many term life insurance policies that lets you exchange your temporary term coverage for a permanent policy — usually whole life or universal life — without proving insurability. That means no new medical exam, and your current health cannot be used to raise your rate or deny you. The option must be built into the policy when you buy it.
Should I convert my term life insurance to permanent?
It depends primarily on your health and your goals. Convert if your health has declined (making new coverage expensive or unavailable), if you still have dependents, or if you now want lifelong coverage and cash value. Don't convert if you're still healthy and a new term policy would be cheaper, if the permanent premium would strain your budget, or if your need for coverage is genuinely ending.
How long do I have to convert my term policy?
Most carriers limit conversion to a specific window — commonly the first 10 years of a 20-year policy, or roughly 15–20 years into a longer term — with an age cap often set at 65 or 70. Whichever limit comes first applies. Once the window closes, the option is lost permanently, so check your policy documents well before your term ends.
Do I need a medical exam to convert term to permanent?
No. That's the central benefit of term conversion: you convert without proving insurability. Even if you've developed serious health conditions since buying the policy, the insurer cannot raise your rate because of them or refuse the conversion. Your new premium will be higher — because permanent coverage costs more and because you're older — but not because of your health.
How much does it cost to convert term life to permanent?
Your new premium is based on your attained age (your age at conversion) and the permanent policy's pricing — not the age you were when you bought the term policy. Because permanent coverage can cost several times more than term, expect a substantial monthly increase. Some insurers also charge a conversion fee. Always ask the insurer for the exact new premium before committing.
Can I convert only part of my term policy?
Yes, most insurers allow partial conversions. You might convert $250,000 of a $1 million term policy to permanent coverage while keeping the remaining $750,000 as term insurance. This is a practical middle path: you secure lifelong coverage and cash value for part of your need without absorbing the full premium increase all at once.
Can I increase my coverage amount when I convert?
Generally no. Most insurers allow you to convert to the same death benefit or a lower one, but not a higher one. If you want more coverage than your current term policy provides, you'd typically need to apply for additional coverage separately — which would require full underwriting, including a medical exam.
References
Conversion windows, age caps, and fees vary by carrier and policy. The figures cited here reflect common industry practice. Always consult your specific policy documents or a licensed agent for the terms that apply to your contract. This article is informational and is not legal, tax, or financial advice.
Last updated on: July 13, 2026
