We hear this question often and unfortunately the answer is no. You can only convert term insurance to permanent insurance – not the other way around.
What are my options if I Don’t Want to keep my Whole Life policy, but still have life insurance?
If you have whole life insurance and no longer want to continue it, but still want to have insurance in place, then you may want to consider a 1035 rollover into a Guaranteed Universal Life (GUL) insurance policy. It’s another type of permanent life insurance, but is designed to minimize the buildup of cash value to keep the premiums at the lowest possible level (often significantly lower than whole life insurance). A 1035 rollover takes the cash value inside of a whole life policy and puts it towards the first-year premium payment to reduce the annual premiums on the new GUL policy to an even lower amount.
It’s important to keep in mind that when the insured individual dies under a permanent life insurance policy, the beneficiary only gets the death benefit proceeds – not the cash value too. Therefore, if you’re not concerned over the buildup of cash value in a permanent policy, then you may want to strongly consider a Guaranteed Universal Life policy to save yourself a ton of money in premium payments or even get a higher level of coverage for the same price.
Whole life can still serve a great purpose, especially if it’s purchased in your younger years and it’s a participating whole life policy – meaning it pays dividends that can be used to reduce the premium over time, purchase paid up additions of insurance, or make payments to the policyowner.
If you’re looking to only possess term life insurance and want to terminate permanent insurance from your program, then you can cash out the permanent life insurance policy and purchase a new term insurance policy. Please note, I would suggest getting approved for the term insurance policy prior to cashing out the permanent policy. The monies you would receive from cashing out a permanent policy would be the cash value less any applicable surrender charges, outstanding loans against the policy, and any due interest on a cash value loan.
What should I do?
Got questions about life insurance? Unsure what to do to buy the coverage you need? Want to compare numerous companies at once and speak with experienced, knowledgeable agents? Then call us today at 1-888-972-0024 to get your free quote comparison. We’re licensed with a number of the top-rated carriers in the industry to make sure you get the desired coverage at the lowest possible cost! You can also e-mail us 24/7 by clicking here.