Don't overlook the benefits of converting term life insurance

Don't overlook the benefits of converting term life insurance

A good thing about term life insurance is that it can help provide you with affordable protection for your loved ones for a short period of time (typically 10, 15, or 20 years). But since the coverage was only designed to be temporary, the price of the protection will start to increase after the original term is up.

Some term policies offer life insurance conversion privileges -- the right to turn your temporary coverage into permanent protection. There may be limits on this feature, including how long the option to convert lasts, age restrictions, and guidelines on what permanent life insurance policies can be chosen. Here are a few reasons to consider converting to permanent life insurance. 

Benefits that can last a lifetime

With permanent life insurance, you own a policy that can last for your lifetime. Your policy is private and is protected from probate and creditors to some degree in every state, so you’ll always have it as long as your premiums are paid

Your premiums now help build cash value

While traditional term insurance can have lower premiums, it doesn’t build cash value. Depending on the type of permanent life insurance policy you choose, you’ll have different opportunities to build cash value.

Certain whole life insurance policies allow for dividends and compound cash value growth.

Universal life policies allow you to be more flexible with the premium you pay and offer different options to build cash value and earn interest.

The accumulation of cash value can serve many purposes during your lifetime, including supplementing your retirement income, helping cover education expenses, and serving as useful emergency fund.

Additional underwriting may not be needed

For most conversions, no additional medical underwriting is needed, allowing for your new permanent policy to be issued sooner. That’s a good thing, because your health could have changed from the time you qualified for your term life policy. However, be aware that some requests, like increasing the death benefit or adding on certain optional features, can trigger additional underwriting requirements.

Have flexibility with riders

Permanent life insurance may offer additional benefits in the form of riders.

Examples of these optional riders could be a waiver of premium rider which pays your policy premiums should you become disabled, or the Accelerated Benefit Rider that allows access to policy values in the event of a chronic or terminal illness. Rider availability can vary between life insurance policies, so be sure to discuss their role with your financial professional.

Convert to meet your need

You typically convert only what you want to a permanent life insurance policy. For example, you may have purchased a $1 million term insurance policy when your children were young. If they are grown and on their own now, you may want a smaller amount of insurance. 

Your life insurance conversion amount may be eligible to be less than what your death benefit was for your term life policy. You may be able to still keep the rest of the unconverted term coverage in place (and convert that portion later too) if you choose to. The earlier you convert, the more time you have to take advantage of the benefits of permanent life insurance. 

Check with your financial professional or insurance company to see if you may be eligible* to convert some or all of your term insurance coverage into permanent insurance. 

*Premiums are based on the age of the insured at nearest birthday and specified underwriting classification and is subject to change without notice. Premiums for issued policies may be different than a quote premium based upon actual underwriting classification. The premium stated in the policy is guaranteed to remain level for the term of the policy. Term products convertible to the end of the level term period or to the policy anniversary date nearest the insured's 70th birthday, whichever occurs first. Conversion options vary by term product. The policy includes certain limitations during the first two policy years.

FlexTerm Series XII policies ICC18-TR-1/1U, Plus ICC18-TR1.P/1U.P) and any state variations are underwritten and issued by, and guarantees based on, the claims-paying ability of Ohio National Life Assurance Corporation.


Life insurance is issued by The Ohio National Life Insurance Company and Ohio National Life Assurance Corporation. Guarantees are based on the claims-paying ability of the issuer. Loans and withdrawals may reduce the death benefit, cash surrender value and any living benefit amount.

Products, product features, and rider availability vary by state. Issuer not licensed to conduct business in NY.

The optional Accelerated Benefit Rider provides for a partial acceleration of the policy death benefit in the event that the base policy insured is certified by a licensed physician as being chronically ill or terminally ill. By taking an accelerated death benefit payment, a lien is created against the policy death benefit. The lien accrues carrying charges at an adjustable rate we declare. The lien, including the lien carrying charges, will be deducted from the total death benefit otherwise payable to the policy beneficiary(ies) and will reduce the cash value available for policy loans, surrenders, or the exercise of any non-forfeiture option.

The required premium for the policy must still be paid even if an accelerated death benefit is taken. If an accelerated benefit is taken and the policy lapses or otherwise terminates, a taxable event may occur. Any death benefit provided by an optional Accidental Death Benefit Rider is not available for acceleration under this rider.

Any accelerated benefit you elect to take under this rider may be taxable. Consult your tax advisor on all tax matters. Adding the rider to a life insurance policy or the taking of rider benefits may affect eligibility for certain public assistance programs and government benefits.

The Accelerated Benefit Rider is not designed to be a substitute for long-term care insurance, health insurance, or nursing home insurance. Rider benefits and features may vary by state.

This provides general information that should not be construed as specific legal or tax advice nor the law of any particular state.  Please seek the advice of a qualified legal or tax professional for your specific situation.