Convertible term insurance plans offer the option to convert a regular term policy into whole-life insurance. This does not require additional medical underwriting.
Before buying a convertible term plan, people should keep in mind the long-term needs of their family such as children's education, buying a house, or life after retirement.
Insurance companies have different terms and conditions for converting term plans, therefore, one should carefully review the conversion options for flexibility. They must understand the current and future costs.
The life insurance companies may also ask for a medical test as a part of the risk assessment before approving the convertible term plan.
The premium for a convertible term plan is determined based on the age of the insured at entry, sum assured, policy tenure and underlying health condition.
The policyholder gets the benefit of tax deduction under Section 80C of the Income Tax Act on a premium of up to Rs 1,50,000.
Compiled by Syed Muskan