What is the most important factor when deciding whether to convert term insurance at attained age or original age?

What is the most important factor when deciding whether to convert term insurance at attained age or original age?

• A. The health
• B. The cost
• C. The premiums
• D. The policy length

Answer: (B)

The most important factor is cost. When you convert term to a permanent policy, the premium for the new policy is typically based on your age at conversion. Converting at your original, younger age usually means much lower permanent-premium rates, while waiting until attained age raises those premiums significantly because you’re older. Health may be less of a hurdle in a conversion since no new underwriting is required, and the choice of a permanent policy’s length is secondary to the immediate question of how much you’ll pay over time. So, the financial impact—the cost of the new premium—drives the decision.

The most important factor is cost. When you convert term to a permanent policy, the premium for the new policy is typically based on your age at conversion. Converting at your original, younger age usually means much lower permanent-premium rates, while waiting until attained age raises those premiums significantly because you’re older. Health may be less of a hurdle in a conversion since no new underwriting is required, and the choice of a permanent policy’s length is secondary to the immediate question of how much you’ll pay over time. So, the financial impact—the cost of the new premium—drives the decision.