What Is Convertible Life Insurance?

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.

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.

Here's how conversion works and when you can do it. 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. A 45-year-old converting a policy they bought at 30 pays permanent life rates for a 45-year-old.

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 can convert from term to permanent coverage within these timeframes:
Years one to 10: Convert anytime with no restrictions
Years 11 to 20: Limited conversion options (varies by insurer)
After year 20: Conversion window usually closes

The key difference between convertible and non-convertible term life insurance is future flexibility and cost. Here's how they compare to help you decide if the conversion option is worth the extra cost.

You'll have several permanent life insurance options when you convert your term life policy to permanent coverage. Which types are available depends on your insurer, but most offer these three main types.

Whole life insurance

Whole life insurance is the most traditional permanent coverage you can convert to. It offers predictable premiums and guaranteed cash value growth. It appeals to people who want certainty in their financial planning without market risk.

• Guaranteed premiums: Never increase
• Cash value growth: Builds steadily at guaranteed rates
• Dividends: Mutual insurers may pay annual dividends
• Best for: Predictable, hands-off permanent coverage

Universal life insurance

Universal life insurance gives you more flexibility than whole life, but requires more active management. This option works well for people whose income varies or who want control over premium timing and death benefit amounts.

• Flexible premiums: Pay more when you can afford it, less during tight months
• Variable death benefit: Can increase or decrease based on cash value
• Interest earnings: Cash value earns current market rates
• Best for: People who want payment flexibility

Variable life insurance

Variable life insurance offers the highest potential returns but has the greatest risk among conversion options. It suits investors who want direct control over their cash value investments and are comfortable with market volatility affecting their policy values.

• Investment control: Direct how your cash value gets invested
• Market risk: Cash value fluctuates with investment performance
• Higher potential returns: Can outpace inflation over time
• Best for: Investors comfortable with market risk

Partial conversion lets you convert part of your term life policy to permanent coverage while keeping some term insurance.

This gives you a balanced solution if you need both temporary and lifelong protection. For example, if you have a $500,000 term policy, you could convert $200,000 to permanent coverage while keeping $300,000 as term insurance.

You get coverage continuity while adapting to changing financial responsibilities. However, some insurance providers require a minimum conversion amount, while others may not allow partial conversions.

Most insurers don't charge conversion fees, but your premiums will jump significantly. Your new permanent policy costs much more than your original term policy.

Permanent insurance costs more 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.

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.

You can buy convertible life insurance online or through an insurance agent. Online applications let you compare and purchase coverage quickly, while agents offer a more personalized experience.

Agents can discuss your needs and show you suitable options. They also help you understand policy terms and walk you through the application process.

Both options make it easy to get convertible coverage that can adapt to your changing needs.

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.
• Partial conversions: Convert part of your term policy to permanent coverage while keeping some term protection. Gives you both temporary and lifelong coverage.
• 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 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.

Common questions about convertible life insurance:

Why Trust MoneyGeek? We analyzed 1,488 life insurance quotes with customer satisfaction ratings, financial stability reports and product offerings to find the best life insurance companies for various needs.

Recency
We updated coverage costs and company information for life insurance providers in 2025.

Methodology

MoneyGeek uses a scoring system to compare life insurance companies across five categories. We review companies with broad national coverage and that offer online quotes.

MoneyGeek's Scoring System

Companies can earn up to five points in each category. We use these scores to calculate an overall MoneyGeek score out of 100.

We weight insurers as follows:

• Affordability: 30%
• Financial Stability: 25%
• Buying Process: 20%
• Customer Satisfaction: 15%
• Product Diversity: 10%

Each company's score includes:

• Cost data from online quotes
• Financial strength ratings from AM Best and years in business
• Customer satisfaction data from the National Association of Insurance Commissioners (NAIC) complaint index (2020 to 2022 data)
• Buying process tools, like online materials and payment options
• Range of life insurance products offered

Sample Customer Profile

We used this standard profile for life insurance quotes:

• 40-year-old man
• Nonsmoker
• 5 feet 11 inches tall and 175 pounds
• Excellent health rating

Premiums use the standard profile unless noted otherwise. We changed the profile by age, gender, height, weight, tobacco use, health rating and location to get quotes for different customers.

We also got quotes for term life insurance with different term lengths and coverage amounts. We found trends in the data and used those patterns to calculate projections beyond our initial collection.