Converting Your Term Insurance into an AssetIf you require permanent life insurance coverage for family, estate planning, business, or tax planning purposes or you just wish to accumulate money in your life insurance program. It may be time to look at a permanent, level cost solution. Many of us purchase large amounts of low-cost term insurance to cover our needs while we are raising our families or growing our businesses. However, as the saying goes, “there is no free lunch”. Eventually, this low-cost term insurance starts to become expensive and converting your term insurance should be considered. If your health has changed and you are no longer able to qualify for a new permanent insurance policy don’t worry, your safety net is the conversion option in your existing policy.
5 Key Reasons for Converting Your Term Insurance Coverage:
- A change in your health – you are no longer able to qualify for life insurance or you have received a sub-standard rating.
- A change in your residency – after you obtained your policy you relocated to another country. Most insurers in Canada will not offer new coverage if you are living abroad. Since the conversion feature in your policy is contractual converting to a permanent plan is allowed no matter where you reside.
- A change in occupation – health is not the only reason an insurer may rate (apply substandard rates) or deny your application for new coverage. If you have changed occupations and now are employed in a more dangerous job, conversion allows you to obtain permanent coverage at standard rates.
- Getting Money out of your Business Tax Effectively– having a corporately owned insurance policy can result in paying for a potential business owner retirement asset in after-tax business dollars versus after-tax personal dollars
- Convenience – Once you have decided that permanent insurance is required converting your existing term insurance is the easiest way of getting it. Usually, just your signature on a conversion form is all that is required.