Don't terminate, convert

Recently, insurers such as State Farm started to allow customers to migrate term coverage piece by piece into a permanent life policy. This gives customers the option of keeping some term and expanding into a whole or universal policy as long as policy coverage minimums are maintained.

Some policies even return all or part of term premiums upon conversion.

"The advantage to any conversion is that you don't have to have evidence of insurability," says State Farm Insurance spokeswoman Carol Carey-Odekirk. "And unlike term, at least by converting you could continue coverage past age 75 or 80."

Opinions vary on whether such a move is practical. Typically, for anyone who qualifies for term, the cost of converting could still prove prohibitively expensive compared to continuing with term coverage.

Then again, converting may be your best option in some cases.

"Convertibility is certainly a feature I like to see included in my clients' term policies, just in case they start a business later and may have need for permanent insurance for a buy-sell agreement, or if their health takes a turn to where all of a sudden they are uninsurable," says Epple.

Hartman agrees: "I would rather my client have whole life than none."

Converting also may be an option for term holders starting a second family later in life, when their income and financial situation would enable them to afford the relatively higher premiums.

But Ramsey isn't convinced. He says the only form of insurance that you might want to substitute for your term policy is long-term care insurance.

"It is a bad decision to purchase whole life, so there's no reason to convert from term life to whole life," he says.

End-of-term decision

For some, it's a parting gift, something to cover the funeral, pay off the mortgage and endow a charity once they've left their last carbon footprint. For others, it keeps their options open, perhaps to convert later or automatically renew should their health take a dive.

Some customers have just gotten used to the low premiums and prefer the security of continuing their coverage.

Given the reality that most Americans are underinsured rather than overinsured, few financial planners object to clients who just feel better with a little term in hand, Hartman says.

"The whole point of term is 'what if?'" Hartman says. "Feeling secure enough to let go of that what-if fear, you'd better be in a pretty good financial position by that point to know that you're making the right decision."