Why Convertible Term Life Insurance is a Smart Choice After 45

Choosing the right life insurance coverage for your current life stage can be daunting. Do you qualify? How much do you need? Can you afford the monthly premiums? For those over 45, convertible term life insurance offers a strategic way to secure vital financial protection while maintaining the flexibility to adapt your coverage as life unfolds, without worrying about future medical exams.

What is convertible term life insurance?

Convertible term life insurance is a type of term life insurance that allows the policyholder to convert a term policy into a permanent life insurance, such as whole life insurance or universal life insurance, with no need to undergo a new medical exam or extensive underwriting.

How a convertible insurance policy works

Most term life policies include a conversion option that allows you to switch to a permanent policy within a predetermined time window, such as within the first five to 10 years of owning the policy or before you hit a certain age.

This conversion clause gives you more control over your future because it gives you the option to buy lower-cost temporary coverage now and then buy permanent coverage with the same death benefit later.

Why it matters after age 45

As we age, the likelihood of developing health conditions increases. By securing insurance now, you can get permanent coverage and avoid the risk of rejection or higher costs later if your health deteriorates.

There’s no charge for doing a term life conversion, but your new premium will probably be higher because you’re converting to a more expensive permanent policy. And while insurers won’t consider your current health a factor, they will use your current age to calculate the new premium. Conversely, if you wait to get life insurance in your senior years, you will face higher premiums the longer you put off the conversion.

In your mid-forties, a convertible term life policy could also be a wise financial planning move. It provides cost-effective coverage during these critical years when you’re likely managing significant financial obligations, such as your mortgage, kids’ education, and retirement planning.

As responsibilities shift (e.g., mortgage paid off, kids out of college), the option to convert allows you to adjust your coverage to align with current finances and long-term goals, such as estate planning.

Key benefits of convertible term life insurance

By selecting term life insurance that converts to whole life, you don’t have to choose between the two because you can switch as needed.

• Locks in lower premiums now: Term life insurance is generally more affordable than permanent life insurance, especially when you are younger and healthier. This allows you to get significant coverage for your current needs without breaking the bank.
• Avoids a new medical exam and underwriting: Convertible insurance policyholders don’t have to undergo medical underwriting again to get permanent coverage. Your insurability is protected regardless of your current health.
• Gives you more time to assess long-term needs: You don't have to make a lifelong commitment to a specific type of coverage upfront. You can secure protection now and switch to permanent coverage later once you have a better understanding of how much life insurance you need.
• Builds cash value: Only permanent life insurance can build cash value. If you exercise your conversion option, you can switch to a permanent policy with a tax-deferred cash value element that can build up over time. You can use this money to take out loans or make withdrawals during retirement.

When should you consider converting your policy?

The decision to convert a term to a whole life policy often aligns with significant life events or changing financial goals, such as:

• When major health changes occur: If your health takes an unexpected turn, converting your policy ensures you maintain coverage without fear of being uninsurable or facing prohibitive costs for new permanent coverage.
• When you’re nearing retirement: Your income may change as you approach retirement, and permanent policies with cash value benefits can come in handy if you need emergency funds.
• When you want to start estate planning: While term life policies aren’t ideal for funding trusts, using a permanent life insurance policy to fund it can unlock some tax benefits for your beneficiaries.¹
• When your term coverage is expiring: If your term is nearing its end and you still have dependents or financial obligations, converting ensures uninterrupted coverage without a gap in protection.

How to buy a convertible term life policy

Purchasing a convertible term life insurance policy is a straightforward process, and Mutual of Omaha offers convenient options to get started.

Online

Mutual of Omaha allows you to explore quotes, calculate your life insurance needs, and even apply for coverage online. When you get a quote for term life insurance, it will include a provision or “rider” that gives you the option to convert to a permanent policy later.

From a financial professional

From a financial professional
You can also work with a qualified financial professional to buy convertible insurance. They can help you:

• Assess your current and future financial goals
• Determine the appropriate coverage amount and term length
• Explain the intricacies of convertible policies and their benefits
• Guide you through the application process

A smart choice to consider

Opting for convertible term life insurance is a smart choice for those in their mid-forties who want to balance affordability and future security.

Ready to explore your possibilities? Calculate your needs and get a term life quote today. Term life policies that can be converted, like the ones available with Mutual of Omaha, can offer peace of mind and the option to convert to a permanent plan.