CONVERTIBLE TERM INSURANCE PLANS: Upgrade to lifelong cover easily

financialexpress.com:

Convertible term insurance plans are increasingly becoming popular as these offer the option to convert a regular term policy into a whole life insurance or an endowment plan without requiring any additional medical underwriting. This feature enables a policyholder to secure lifelong coverage.

While regular term plans only offer life cover for a specified period, a convertible term insurance plan provides the flexibility to upgrade to lifelong coverage securing insurance needs for the long term. In a pure term insurance plan there is no maturity benefit if the policyholder survives the policy term. However, if the pure term is converted into an endowment after a predefined policy period, the policyholder will get maturity benefit as well even if she outlives the policy period. However, the premium for convertible term insurance plans is higher than that of pure term insurance plans.

A convertible term insurance is helpful to stay protected with insurance as family responsibilities rise. Moreover, buying a new endowment assurance plan later in life will be expensive as the mortality charges increase with age. So, a convertible term insurance plan will give an individual the benefit of savings as well as insurance cover without paying higher mortality charges.

Rakesh Goyal, director, Probus Insurance Broker, says a convertible term plan offers an initial affordable term insurance that can be transformed into a permanent life insurance plan later on, maintaining the same coverage and death benefit. “This option ensures lifelong protection, regardless of future health changes, while locking premiums at a lower rate based on the age at which the term plan was purchased.”

What to keep in mind

Before purchasing a convertible