Convert term to permanent life insurance

Key takeaways

• You may be able to convert some or all of your term life insurance policy to permanent life insurance, depending on your contract.
• Many policies set a conversion deadline, and some may let you convert without new medical evidence within the policy rules.
• The right policy depends on your needs and timing. If you’re unsure, connect with an advisor.

Can you convert a term life insurance policy into a permanent life insurance policy? 

In many cases you can convert term insurance to permanent insurance. Some term policies may offer this option, and many include a deadline for when you can do it.

The exact rules depend on your contract. In some cases, you may be able to convert without new medical information if you stay within the policy rules. This can help if you want to keep coverage in place as your needs change.

What does it mean to convert term insurance to permanent insurance?

Converting term insurance to permanent insurance means changing your policy from one that covers you for a specified period (typically 5 to 40 years) to one that provides lifelong coverage.

Things to keep in mind: 

• Term insurance expires after the set term ends, and you lose coverage unless you renew.
• Permanent insurance remains active for your lifetime, as long as premiums (fees) are paid.
• Cost impact. Your premiums may increase since you're now paying for lifetime coverage instead of temporary protection. 
• Convert a portion of your policy. You can have a partial conversion. This is where you can move a portion of your existing coverage into a permanent policy and keep the remaining amount within the term policy. Keep in mind, certain conditions may apply. Connect with an advisor for more detailed information.  

Converting can also be useful if you realize you need lifelong coverage beyond the original term period.

Learn more about the differences between term vs permanent life insurance

What are the key benefits of converting from term to permanent? 

• Conversion benefit: This allows you to switch without needing to provide new medical information, which is valuable if your health or lifestyle habits have changed.
• Cash value: Some permanent policies can build cash value over time, which you can borrow against or withdraw and use however you please. 
• Lifetime protection: Permanent insurance provides coverage for your entire life, whereas term insurance expires after a set period.
• No renewal concerns: With permanent life insurance, you won't face the challenge of finding affordable coverage at an older age if your health or lifestyle habits have changed.
• Lock-in rates: Converting while young and healthy typically results in lower rates than applying later.
• No new underwriting needed. Direct conversions often don't require new medical information or underwriting reassessment.

Get started

Thinking of converting from term to permanent? Talk to an advisor to get started.

What changes when you convert from term to permanent life insurance?

When you convert from term to permanent, you’re changing the kind of coverage, not just extending the old one. The new policy may have different features and premium payment patterns. Here are some key points to keep in mind:

• Your term coverage changes to permanent coverage for the amount converted. 
• The new policy follows the rules of the permanent coverage available under your contract.

Do you need to provide new medical information when converting from term to permanent?

Generally, you do not need to provide new medical evidence as long as you’re not increasing the death benefit or adding new riders onto your policy.

What permanent coverage options may be available?

Which permanent life insurance options are available depends on your existing insurance contract. There are three types of permanent life insurance: whole life, participating life and universal life insurance – each one offers lifelong protection and some include a cash value savings component. You may be able to convert into one of these permanent policies depending on what your contract allows.

More on: 

• Differences between term and universal life insurance
• Differences between term and whole life insurance

When does converting from term to permanent make sense? 

Conversion can be worth a closer look if you still need life insurance after your term ends. It can also help if you want coverage that may last for life.

Your age, health and timing can all matter. If you convert to permanent life insurance when you’re younger, you may be able to secure lower premiums then you would at an older age.

Conversion may also be worth considering when life changes increase your coverage needs. Life changes can include things such as a growing family, mortgage obligations, business debt, or legacy planning.

What if you need more coverage than the policy conversion limit?

If you’re eligible, you can convert your entire term policy to a permanent policy without any limitations. 

If you want to do a partial conversion, the amount you can convert depends on your policy contract details. If you need more coverage than you can convert, you may want to look at other options as well. Keep in mind, product minimums apply to all conversions. Connect with a Sun Life advisor to discuss all your options.

How does the term-to-permanent conversion process work?

The process depends on your contract. Start by reviewing your policy and the permanent coverage options available to you. The new policy depends on the coverage you choose and the rules in your contract. 

If you currently have term life insurance, you can convert to permanent at any time before the final conversion date. Check the Policy Summary on your contract to see your last date to convert. It should also help you confirm whether your policy allows conversion without new medical evidence.

What steps are usually involved?

Step 1: Start by checking your policy and the permanent coverage available to you. 

Step 2: Review the rules that apply to conversion and any limits in your contract. 

Step 3: Connect with a Sun Life advisor to get started with the conversion application process.

This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.