What’s a term-to-perm conversion?
It’s when you turn all or some of your term life policy into a permanent life policy. This helps lock in coverage for life without another health exam or underwriting.
Who can convert?
You can usually convert your term policy after its first anniversary as long as it’s in good standing. Some restrictions may apply. See note 1
For more details, review your policy.
Learn more about converting from a specialist.
Specialist's Guide to Conversion Benefits
Video Duration: 3 minutes 1 second
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Hello! My name is Brianna, and I'm one of your life insurance specialists. I have the opportunity to work with members just like you every day to help them understand and maximize the value of their life insurance policy, and there's one topic that many members wish they knew about sooner.
Did you know you may be able to convert your term life insurance policy into permanent coverage — no medical exam required?
Think of term life insurance like renting a home. You have it for a set period, but once the term is up, you either have to renew at a higher cost or move out. But what if you had the option to buy that home instead? Not only do you have that home for life, but the money you put into it builds after the purchase. That's exactly what converting your term life insurance to a permanent policy is like.
In this video, we'll highlight the key benefits of converting some or all of your term coverage into permanent coverage, and how this could be a good move for you!
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Benefit 1: Permanent insurance is just that, permanent. This coverage never expires as long as you pay your premium and it lasts your entire life. That means no gap in protection or increased premiums as you get older, even if health issues arise. Converting as little as $50,000 of your term coverage into permanent insurance may help cover final expenses and estate planning needs, taking the pressure off your loved ones.
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Benefit 2: It builds cash value! Permanent life insurance contains a component that over time grows tax-deferred. That's money you may be able to borrow from later to cover emergencies, supplement your retirement income or fund big goals you may have later in life.
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Benefit 3: The earlier you convert, the more you could save! By locking in your current age and health status of your current policy, you avoid the risk of higher premiums later.
So why consider converting? For lifelong coverage, plus peace of mind knowing your legacy and final wishes are protected. Remember, converting coverage does not have to happen all at once. Many members take a phased approach.
The opportunity to convert might vary depending on which type and amount of term policy you have. We also believe that different needs require different plans. So give one of our licensed specialists a call to see if converting is the right option for you.
Thank you for taking the time to listen today. You are a valued member here at USAA, and it's an honor to serve you.
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When you should consider converting
Here are some examples of when it may make sense.
- Your policy’s initial term is ending soon.
- Your health has changed or you’d rather not go through another medical exam.
- Your financial situation has changed since you took out your term policy.
- You want coverage that’s guaranteed to last for the rest of your life.
How switching to a permanent policy could help you
With whole life insurance, you may be able to:
- Pay off remaining debt so it’s not left to loved ones.
- Care for family members with special needs.
- Pay for funeral and final expenses.
- Leave a financial legacy for loved ones, your business or charity.
- If your policy has cash value, you may be able to use it to supplement retirement income.
How much coverage should I convert?
It depends on your financial goals and needs.
Some people want enough permanent coverage to help support their children’s education or spouse’s retirement. Others simply want to ease the burden on loved ones after they pass.
What happens to the term coverage I don’t convert?
You can choose whether you want to cancel your remaining term coverage or keep all or some of it. To maintain your term policy, you need to keep at least $100,000 of coverage.
Convert your term life policy FAQ
Generally, the earlier you convert your term policy the lower the cost will be for your new permanent policy.
You can keep them the same or change them. View your beneficiaries.
If you cancel or convert your entire term policy, your child rider will move to your new permanent policy. If you keep your term policy, the child rider will stay with it.