What Is Convertible Term Life Insurance? (2026, Canada)
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What is convertible term life insurance?
A convertible term life insurance policy is a term life insurance policy with the option to convert later on. This type of life insurance is available from many (but not all) Canadian life insurance companies, including PolicyMe.
- What is being converted? An existing term policy can be (optionally) converted into a permanent life policy. This means you get lifelong coverage, rather than coverage for a period of time that expires at the end of your term.
- Do I have to convert if I have convertible term life insurance? No. Convertible just means that you have the option to convert if you want to. It’s not mandatory by any means.
- When can I convert it? It depends on the policy, but there’s a “conversion period” within which you’re allowed to convert. It’s usually up until a certain age (like 60 or 65) or while your term policy is still active.
- Will my premium stay the same? No, your premium will increase based on your current age when you convert to a permanent policy. However, it’s guaranteed coverage.
In simple terms, a convertible term life insurance is a smart way to get cheap term life insurance in Canada now with the flexibility to change your mind down the road if you need more coverage to protect your loved ones later.
No! A convertible policy means you can convert a term policy into a permanent policy. A renewable policy means you can renew your term coverage for another term policy when it expires—without a medical exam.
Why convertibility matters
Convertibility is valuable because it gives your future self more options than a non-convertible policy.
Why would you convert a term life insurance policy?
You might choose to convert a term life insurance policy to permanent coverage if, when your term policy is near expiry, you have new lifelong obligations that you didn’t have before.
Here are some situations where it could be very helpful to convert a term life insurance policy:
- You have health problems. New health issues arose during your term policy. Now, you can convert to get a permanent policy with no new medical underwriting (i.e., guaranteed coverage) and level premiums.
- You have a lifelong dependent. You now have a disabled child or an elderly parent who depends on you financially. You can convert to a permanent policy to guarantee your dependents have a payout when you pass.
- You have a complex estate. You anticipate probate fees and taxes when you die. Converting to a permanent policy is one way to cover final expenses like these.
When your dependents no longer need you and your debts are nearly paid off, the need for life insurance decreases. That’s why term insurance is so valuable—it covers you when you need protection, and then your coverage (and your premiums) stop.
When is converting a term life insurance policy not a good idea?
Converting term to permanent is not a good idea if your financial obligations are still temporary and simply extended, not lifelong.
What if you still need coverage when a term policy expires? You could choose to shop for a new policy and seek fresh life insurance quotes instead of converting or renewing. This makes sense if you’re in good health when your current term life insurance expires. It’s likely cheaper, too, since level term means fixed premium payments.
You’d only really convert a term policy if you still need coverage and a new term policy would be prohibitively expensive or impossible based on your current health status.
Conversion vs. buying a new life insurance policy
Conversion’s major advantage is that you don’t have to pass a medical exam so you can’t be denied or charged an exorbitant rate if you have developed health issues—unlike with buying a new policy.
A note on premiums: It’s true that your rate for a permanent policy would be lower now compared to a future date even if you convert. However, permanent rates are much higher than term rates to begin with, so you’re likely to save money with convertible term coverage in the long term.
What’s the best convertible term life insurance plan?
The best convertible term life insurance plans make it easy to transition to permanent coverage if your needs shift, and keep costs low today while offering a seamless switch in the future.
Here’s what to look out for when choosing a convertible term life policy:
- No-medical conversion: The option to switch your term policy to a permanent plan without new underwriting, health questions, bloodwork, or assessment of pre-existing conditions.
- Clear conversion deadlines: Specific dates for when you can convert, including age limits or policy anniversaries, plus details about partial conversions.
- Affordable initial term premiums: Cost-effective premiums for your initial term policy with the option to upgrade later at a higher cost. This reduces your overall cost of life insurance compared to buying a permanent policy from the start.
- Permanent policy options: A clear outline of the permanent policies available. Some insurers may offer a range of permanent life insurance products, while others may only offer whole life insurance or term 100 life insurance.
- Built-in conversions: The policy is convertible by default, not with an additional fee or as a policy rider.
Every PolicyMe term life insurance policy is convertible, which means that you can choose affordable coverage now without sacrificing the ability to switch later on. This built-in feature helps future-proof your coverage if your circumstances change and you need lifetime protection. Term life rates are some of the most affordable with PolicyMe, so your overall life insurance costs remain low vs. the high cost of starting with permanent coverage.
Convertible term life insurance vs. permanent life insurance
The main differences between convertible term and permanent life insurance are:
- How long you’re covered
- How much you pay
- Flexibility
Convertible term policies are cheaper upfront and give policyholders flexibility to buy a permanent policy later if needed. Permanent life insurance policies charge higher premiums for life and you usually cannot adjust coverage levels without new underwriting.
If you know you want lifelong coverage, why wouldn’t you just get a permanent policy instead of a convertible term policy? Permanent life insurance is expensive. If it's something you really want, a convertible policy means you could get coverage now and have peace of mind that you can potentially still get permanent coverage in the future when you're earning more money.
Buying a policy for the first time? Here’s a comparison:
The bottom line: A convertible term life insurance policy is a smart middle ground that gives you coverage now and choices in the future.
Example scenarios for policy conversion
Here are three examples to illustrate when policy conversion may or may not be a good idea. Every situation is unique, so make sure to consult a life insurance advisor or a financial planner before you decide.
Example 1: Converting term life insurance is a good idea
Anika bought a 20-year term policy at age 35 to cover her mortgage, but now expects to have permanent financial obligations to cover. She’s now 47 and was recently diagnosed with high blood pressure.
Why it’s a good idea: Anika is now guaranteed lifelong coverage without medical exams, which protects her dependents even if her health worsens. She locked in a lower premium by converting before her term policy expired, as premiums are based on age.
Example 2: Converting term life insurance isn’t a good idea
Andy bought a 15-year term policy when he was 25 to cover student loans. He is now a healthy and debt-free Canadian at 35 years old, with five years remaining on his term policy. He has a partner but they’re not married, and they rent separately.
Why converting is not a good idea: Converting now would lock Andy into high premiums for coverage he doesn’t need for life. Without dependents or long-term financial obligations, he probably doesn’t need lifelong coverage and his money could grow faster in other investment vehicles.
Option 1: If Andy ends up marrying his partner or taking on a mortgage, then he could consider buying a new term policy when his current policy expires (so long as he remains healthy).
Option 2: If Andy’s health seriously declines in the five years left on his term, he may want to consider converting to a permanent policy. This means higher life insurance premiums, but the death benefit can help cover his final costs if Andy doesn’t set aside enough money meanwhile.
Example 3: Buying permanent life insurance over term life insurance is a good idea
Shauna is 40 and her 5-year-old has special needs and will need lifelong care. Shauna is saving for her own retirement and her current income is enough to care for the child. However, Shauna wants her dependent to have lifelong protection into adulthood, even after Shauna passes away.
Why permanent is a good idea: Shauna knows her child will need care for life. A permanent policy ensures her child’s financial security no matter when Shauna dies. A term policy lasts only a set number of years, so if Shauna outlived her term the child would be unprotected.