Convertible Life Insurance

Convertible Term Insurance is a flexible form of term insurance which gives you the chance to convert your 'temporary' term insurance into a more 'permanent' life insurance policy. You will usually be able to make this conversion shortly before your term insurance would expire. If you convert your term insurance policy it will have a cash value. Cash value entitles you to take a lump sum payment if you decide to cancel the policy, for example. The permanent policy that you choose will be in the form of a whole-of-life insurance or an endowment insurance. You cannot however, change the sum assured; this is fixed on the value of the previous term insurance policy.

If your insurer offers you a convertible term insurance policy, you are entitled to convert your policy regardless of your current state of heath. This means that if you are in a worse state of health than you were when you took out the initial policy, your insurer will not take this into account. Although your state of health is not taken into account, your change in age will be, and therefore your premiums (the amount you pay each month) will inevitably rise. The disadvantage to this convertible insurance is that it may 'lock' you into accepting a particular provider's insurances.