Keep in mind that part of the reason that term insurance can be obtained at a lower cost than a permanent policy is because a term policy is designed to provide only a temporary duration of protection for a temporary need. So with "term" policies the original term length (number of years the policy is set up for) can expire before people die, and if that happens the insurance company gets to keep all the premiums paid over the years and doesn’t have to pay out a death benefit.
Where as permanent insurance is generally designed to last your life time and eventually the life insurance company will have to pay out a death benefit to your beneficiaries. (That is, if you kept your policy in force until you die. In other words, you didn’t let your policy lapse due to non-payment, etc.)
- No underwriting required on term conversions. Keep the rate class you had when you were younger and healthier without a med exam.
- Protection throughout your lifetime.
- If you are unhealthy and currently own a Term policy, then converting your existing policy to a permanent policy before the term expires can guarantee continuation of coverage. (If the policy provides for conversion rights.)
- Permanent life insurance can be set up to accumulate cash value, and you have the ability to access cash that has accumulated, in the form of loans and withdraws after a certain period of time.
- Conversion Credits. Some carrier may offer conversion credits for converting your term policy.
- Level Premiums. A new permanent policy can ensure that your premiums will never increase.
- Avoid a new surtax to fund ObamaCare. Income from a life insurance policy is not subject to the new 3.8% surtax to fund the Healthcare Bill.1
- Supplement Retirement Income – Tax Free! At retirement you can take withdrawals from your policy up to cost basis, then switching to loans thereafter. These payments are income tax free as long as the policy is not a Modified Endowment Contract (MEC).1
- To mitigate taxation of Social Security Benefits. Currently, income from life insurance policies does not impact the income calculation for taxing social security benefits.1
- Creditor Protection. Some state statutes protect cash value from the claims of creditors.
- To provide for business continuation. Permanent life insurance is typically a better solution than term for funding a business continuation plan. It ensures that the policy will be in force regardless of how long the business owner stays active in the business. Policy cash values may be available to fund a lifetime buyout or supplement an owner’s retirement.
- Cash Value Life Insurance is not a factor in determining eligibility for financial aid. As a general rule, policy cash value is not a factor used in determining eligibility for financial aid for college.
Feel free to call me directly at 941-404-5334 to set up an appointment to help determine if converting an existing term policy is right for your situation.
Note: Life Insurance information can be confusing to many people. As an "independent licensed agent" I can explain things to you in simple terms so you feel comfortable making a decision. Then I can help you choose a life insurance policy, from many choices of different insurance companies, that you feel fits your needs. Plus if you choose to work with me you will have personalized service by a local agent that can shop premium quotes for you. If you would like my assistance to discuss and/or start the process of getting you insured please call me at 941-404-5334.
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1. Disclaimer: I am not a tax advisor. I am insurance licensed only, thus regarding tax advice always be sure to check with your tax accountant first for your individual situation before making any decisions.