You made a smart decision when you purchased your term life insurance policy – you knew it was important to buy life insurance to protect those most important to you. If it has been a while since you purchased the policy, you may be wondering if it still fits your needs.
Maybe your family has grown, or you are ready to plan for retirement and you wonder if your life insurance policy is able to change and grow with you. Most term life insurance policies will allow you to convert an existing policy to whole life insurance, giving you permanent insurance. How do you decide if permanent life insurance is the best option for you, and when it makes sense to convert your existing term life policy? Every situation is unique, but we have developed a list of reasons permanent insurance policies make sense when you mature.
Benefits of Permanent Insurance:
- Coverage that never expires – term life insurance is purchased for a pre-determined amount of time, usually 10, 20, or 30 years. When the term is up, you no longer have coverage unless you convert to a more permanent insurance option (like a whole life policy). Whole life insurance never expires; with whole life insurance, you are covered for a lifetime as long as premiums are kept current.
- Helps Build Savings – part of the premium for a whole life policy goes toward building “cash value” which builds over time. You are able to borrow against the cash value of your policy, which makes a permanent insurance policy a valuable savings tool.
- Retirement Supplement – In addition to being a savings tool, permanent insurance policies can be a tax-advantaged way of funding your retirement. Depending on how the policy is structured, you may be able to use the cash balance of your whole life policy as a tax-free source of income in your golden years.
- Protection for Long Term Care – Depending on your needs, you can structure your policy so that you benefit while you are still living. Because your policy accumulates value based on the premiums that you pay, and you can use this cash value to assist in paying for long term care needs. (If you are looking to plan for long term care needs, consider talking to your agent about a Daily Living rider.) Doing so will allow you to preserve your estate for your beneficiaries.
- Provides Financial Security for Beneficiaries – at the time of your death, your life insurance policy will provide the resources necessary for your loved ones. You can choose how your policy will pay your beneficiaries, and ensure their lasting financial security. You can rest assured knowing this benefit won’t expire after any length of time, as long as the premiums are kept current.
See also: Top 5 Unexpected Used for Life Insurance
With Farm Bureau, converting your policy is as easy as making a call to your agent. And you may even be able to get a conversion credit for making the transition! Your credit would be applied to the first year’s premium of your new permanent life insurance policy.
Contact your Farm Bureau agent today to learn more about the value of permanent insurance and how you can convert your existing term policy.