Penn Mutual sells two categories of term insurance that look similar on a premium quote and are worth entirely different things in the secondary market. Guaranteed Convertible Term carries a conversion right that is unusually generous by industry standards. Protection Non-Convertible Term carries none at all — and a term policy that cannot be converted has essentially no market value, because a buyer is purchasing a death benefit that must eventually be paid, and coverage that expires while the insured is living pays nothing.
Find out which one you have before you do anything else. It is printed on the declarations page and confirmed in the conversion provision.
If it is the convertible product, the terms are worth knowing precisely. Penn Mutual’s convertible term is offered in 10, 15, 20 and 30-year level periods, and the conversion privilege permits conversion to any permanent life product the company makes available in your state, at any time during the level term period, up to the policy anniversary nearest the insured’s 70th birthday. On the 30-year product, conversion is available during the first 20 years. Face amounts may be combined when converting into a survivorship policy. New term pricing took effect March 1, 2026.
The phrase “any permanent product available in your state” is the part that matters, and this page explains why it separates Penn Mutual from carriers that have exited retail life sales.
In This Article
Why “any permanent product” is a materially better clause
Most conversion provisions in the industry read something like “a permanent policy the company makes available for conversion at that time.” That phrasing lets a carrier designate a single, often unattractive, conversion product — and if the carrier has stopped writing retail permanent insurance entirely, the clause can become genuinely difficult to exercise.
A clause permitting conversion to any permanent product available in the state is broader. It means the converted policy can be a guaranteed universal life contract chosen for its low premium per dollar of guaranteed death benefit, rather than whatever the company has designated as its conversion vehicle. In a settlement context that matters directly: the buyer funds the converted policy’s premiums for years, so a cheaper permanent chassis means a better offer to you.
Penn Mutual is also a mutual company that has never demutualized, founded in Philadelphia in 1847 and headquartered in Horsham, Pennsylvania, still actively writing individual permanent life insurance. There is no acquiring insurer to locate and no closed block to negotiate with. Its affiliates include The Penn Insurance and Annuity Company, a Delaware company, and Vantis Life Insurance Company, acquired in 2016. Solvency oversight sits with the Pennsylvania Insurance Department.
Do not take any of this on faith for your specific contract. Ask the carrier in writing which permanent products are currently available for conversion in your state, and request an illustration for the one with the lowest guaranteed premium.
Working out your own deadline
Take the policy and calculate two dates.
The age-70 anniversary. The conversion right runs up to the policy anniversary nearest the insured’s 70th birthday. Get the carrier to state that exact calendar date rather than computing it yourself, because “nearest” is a defined term and a birthday in the second half of the policy year can move it by a full year.
The level term end date, adjusted for the 30-year rule. On the 30-year product, conversion is available during the first 20 years, not the full 30. A 30-year policy issued at age 46 stops being convertible at 66 — four years before the age-70 limit would have bitten. On a 20-year policy issued at 58, the level period runs to 78 and the age-70 limit governs.
Whichever date comes first is your real deadline. Then note the squeeze this creates. The settlement market becomes meaningfully interested in insureds at roughly 65 and above; conversion rights close at 70 or earlier. The overlap is a narrow window that closes permanently. If the insured has a serious diagnosis and is in their late sixties, this is genuinely time-sensitive in a way that very few insurance decisions are. Detail on the provision itself is in our term conversion rider explainer.
How conversion is priced and who funds it
Conversion reprices coverage at the insured’s attained age while carrying forward the risk class assigned at original underwriting, with no new evidence of insurability. That asymmetry is the entire source of value. A preferred nonsmoker classification earned at fifty-four survives a stage-four diagnosis at sixty-eight, because the carrier already accepted that classification and contractually agreed to honor it on conversion.
The premium reflects current age, and the increase is large. A $1,000,000 convertible term policy costing $3,400 a year at sixty-five can convert into a guaranteed universal life premium in the range of $50,000 to $70,000 annually depending on the product and the guarantee period selected. Almost no policyholder can absorb that, which is why conversion alone is rarely the answer for someone trying to reduce cost.
In a settlement, the buyer funds it. The sequence is: submit the term policy for review; providers underwrite and issue offers contingent on conversion; conversion and change of ownership execute together at closing, with the buyer assuming premiums. You should never be asked to pay a large conversion premium out of pocket in advance against a promised sale — that request appears on our list of red flags for good reason. The straight comparison of both routes is in settlement versus term conversion.
One Penn Mutual-specific option worth raising: because face amounts may be combined when converting into a survivorship product, a married couple holding two separate convertible term policies has a planning route that most carriers do not offer. Whether that helps or hurts depends entirely on the goal — survivorship coverage is harder to sell, but cheaper to maintain. Discuss it with your own advisor.
| Feature | Guaranteed Convertible Term | Protection Non-Convertible Term |
|---|---|---|
| Conversion right | Yes — to any permanent product available in your state | None |
| Conversion deadline | Anniversary nearest age 70; first 20 years on the 30-year product | Not applicable |
| New evidence of insurability required | No | Not applicable |
| Secondary market value | Possible, subject to age, health and face amount | Essentially none |
| Combining face amounts into a survivorship policy | Permitted | Not applicable |
Pennsylvania inheritance tax changes the comparison
This is a genuine Pennsylvania-specific consideration and it is frequently missed.
Pennsylvania imposes an inheritance tax on transfers at death, at rates that depend on the relationship of the recipient: 0 percent to a surviving spouse, 4.5 percent to lineal descendants such as children and grandchildren, 12 percent to siblings, and 15 percent to other heirs. Life insurance death benefit proceeds paid on the death of the insured are exempt from Pennsylvania inheritance tax.
Cash is not. If you sell a policy and hold the proceeds, that cash sits in your estate and is taxable to your heirs at the applicable rate. On $300,000 passing to children, the difference between a tax-exempt death benefit and a taxable cash balance is roughly $13,500 in Pennsylvania inheritance tax — on top of any federal income tax on the taxable portion of the settlement proceeds.
That does not mean selling is wrong. It means the comparison must be after-tax on both sides, not face amount against offer. If the alternative is letting an unconvertible policy expire worthless, the tax is irrelevant. If the alternative is keeping coverage the family will actually receive, the tax matters. Take this to your own tax advisor and estate attorney; nothing here is advice about your situation. Background on the federal side is in how life settlement proceeds are taxed.
The screens that follow convertibility
Assume the conversion right is confirmed and open. Three filters remain.
Face amount. The working floor across most providers is around $100,000, and a large share will not review below $250,000. Because the buyer funds a permanent premium for years after conversion, small face amounts cannot absorb underwriting, escrow and closing costs. See minimum policy size.
Age and health. The market targets insureds roughly sixty-five and older, or younger insureds with a significant diagnosis. A healthy sixty-three-year-old with a fully convertible policy will typically receive no offer, and that is an ordinary result rather than a failure of representation.
Ownership and consent. Only the owner of record can transfer the policy. If a business, a trust, or a former spouse under a divorce decree owns it, that party signs. An irrevocable beneficiary must consent in writing, and any collateral assignment to a lender must be released — both take time, so start early.
Penn Mutual distributes heavily through career agents and independent producers who often maintain long client relationships. If your original agent is still in practice, they can frequently obtain the conversion illustration faster than a service center can, and they have no reason to withhold it.
If you hold non-convertible term
Say it directly: Protection Non-Convertible Term has no conversion right, and a policy without one has essentially no secondary market value. No broker can create a market for it, and you should not spend weeks assembling medical records to confirm that.
Turn to what the contract contains. Many Penn Mutual term forms include an accelerated death benefit provision paying a portion of the face amount on certification of terminal illness, and some include chronic illness triggers. That is a claim against your own policy — no buyer, no escrow, no third-party underwriting — and it typically pays faster than any settlement. Check as well for a waiver of premium benefit that may have gone unclaimed during a period of disability.
If the insured has a terminal prognosis, a viatical settlement operates under different regulatory and tax rules than a life settlement and deserves separate evaluation.
And if the coverage is still needed but the premium has become unaffordable, the answer may be a smaller replacement policy rather than any transaction on this one.
Pine Lake Life Solutions provides education and a free policy review. Pine Lake does not purchase policies and we are not licensed in every state. Send the policy cover page and the conversion provision and you will get a plain read on which of Penn Mutual’s two term categories you actually hold and whether the clock is still running.
Frequently Asked Questions
How long does a Penn Mutual convertible term policy stay convertible?
The conversion privilege runs at any time during the level term period, up to the policy anniversary nearest the insured’s 70th birthday, with no new evidence of insurability. On the 30-year product, conversion is available during the first 20 years rather than the full 30. Ask the carrier to confirm your exact calendar deadline in writing rather than computing it yourself.
What can I convert into?
Penn Mutual’s convertible term permits conversion to any permanent life product the company makes available in your state, which is broader than the industry norm of a single designated conversion product. Ask the carrier which permanent products are currently available for conversion in your state and request an illustration for the one with the lowest guaranteed premium.
I have Protection Non-Convertible Term. Can it be sold?
Essentially no. Without a conversion right, the policy will expire while the insured is living in most scenarios, and a buyer’s entire investment depends on a death benefit eventually being paid. No broker can create a market for it. Look instead at any accelerated death benefit rider in the contract, or at a waiver of premium benefit unclaimed during a past disability.
Who pays the much higher permanent premium after conversion?
In a settlement, the buyer. Conversion and the change of ownership execute together at closing, and the buyer assumes premiums from that point, so the owner never carries the permanent cost. Be skeptical of anyone asking you to fund a large conversion premium up front against a promised sale. Get the written offer first, contingent on conversion.
Does Pennsylvania inheritance tax affect whether I should sell?
It belongs in the comparison. Pennsylvania taxes transfers at death at 0 percent to a spouse, 4.5 percent to lineal descendants, 12 percent to siblings and 15 percent to others, and life insurance death proceeds are exempt. Cash from a settlement is not exempt. Compare after-tax outcomes on both sides with your own tax advisor and estate attorney.
Why is the timing so tight on convertible term?
Because the conversion right closes at the anniversary nearest age 70 while the settlement market becomes meaningfully interested at roughly 65 and above. The usable overlap is a few years and it closes permanently. If the insured has a serious diagnosis and is in their late sixties, this is genuinely time-sensitive in a way most insurance decisions are not.
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Related Reading
- Can I Sell A Term Life Insurance Policy
- What Is A Term Conversion Rider
- Life Settlement Vs Term Conversion
- Life Settlement Red Flags To Watch For
- Are Life Settlement Proceeds Taxable
- Minimum Policy Size For A Life Settlement
- What Is Guaranteed Universal Life
- What Is An Accelerated Death Benefit Rider
- Sell Term Life Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.