October 15, 2024 · 18 min read
Converting Term Life to Whole Life: How It Works
How to convert a term life policy to whole life, when to do it, what conversion costs, and how borrowing against the new policy's cash value works.
Term life insurance
The most coverage for the least money. Pick how long you need protection — 10 to 30 years — and lock in a premium that never goes up during the term.
Updated · Editorial standards
- Estimates from
- $14/mo
- Healthy non-smoker, best health class. Your price depends on age, health and coverage.
- Term lengths
- 10, 15, 20, 25, 30 years
- Coverage
- $100k – $10M+
- Typical ages
- 18 – 75 to apply
- Medical exam
- Often not required
The basics
What is term life insurance?
01
Fixed term
You choose how long you want to be covered, whether it's for 10 years or 30 years.
02
Set payout
Your loved ones get a specific amount, tax-free in most cases, if you pass away during the term.
03
Lower premiums
Term life usually costs a fraction of whole life because it only covers a set period and builds no cash value.
Who it’s for
- Parents who want coverage until the kids are grown and through college
- Homeowners who want the mortgage paid off if something happens
- Anyone who needs serious protection on a tighter budget
- Business owners covering a loan, a partner buyout or a key person
How term life insurance works
You pick a coverage amount (the death benefit) and a term length. As long as premiums are paid, the insurer pays the full benefit to your beneficiaries if you die during the term. Your premium is locked for the whole term on a level-term policy.
If you outlive the term, coverage ends and nothing is paid — which is exactly why it is so affordable. Many policies let you convert to permanent coverage without a new medical exam, or renew year to year at a higher price.
How much does term life insurance cost?
Price is driven mainly by age, health, tobacco use, coverage amount and term length. A healthy 30-year-old can often get $500,000 of 20-year coverage for less than a streaming subscription. Every year you wait, the price goes up — and health changes can raise it further.
Use our rate checker to see an estimate for your exact age and health in about two minutes, then a licensed advisor confirms the best carrier for your profile.
Choosing the right term length
Match the term to your longest financial obligation: the years left on your mortgage, or until your youngest child is independent. A common approach is "laddering" — two smaller policies with different terms — so coverage steps down as your needs shrink.
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FAQ
Term life insurance questions
What happens if I outlive my term life policy?
Coverage simply ends and no benefit is paid. Many policies offer a conversion option to permanent coverage before a certain age, or annual renewal at higher rates. Some carriers sell "return of premium" term that refunds premiums if you outlive it, at a higher cost.
Do I need a medical exam for term life insurance?
Not always. Many carriers now offer accelerated underwriting that approves healthy applicants up to $1M–$3M without a nurse visit, using prescription history, MIB records and motor vehicle reports.
Can I cancel term life insurance?
Yes. You can stop paying at any time and the policy lapses. Term policies have no cash value, so there is no surrender charge and nothing paid back.
Is the death benefit taxable?
In most cases, life insurance death benefits paid to a named beneficiary are not subject to federal income tax. Estate tax can apply to very large estates.
Read more
Guides on term life insurance
October 10, 2024 · 19 min read
How to Choose a Term Length for Life Insurance
Compare 10, 20 and 30-year term lengths and learn how to match your policy to your mortgage, children's ages, income and retirement plans.
October 8, 2024 · 19 min read
What Happens If You Outlive Term Life Insurance?
Find out when term life insurance pays out, how claims work, and your options when the term ends, including renewal, conversion and buying a new policy.
See your rate in about two minutes.
No phone number needed to see your estimate. Compare 50+ carriers, then talk to a licensed advisor only if you want to.