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Is it worth it to upgrade a guy to Terminator armor in a Long Fang squad for the Space Wolves? It is nice to be able to tank hits, but it is expensive and he doesn't really add much firepower to the unit. I used to do this in their last codex, but only because back then you could also get a Cyclone launcher on the terminator, and ALSO have the plasmagun. (cyclone, 5 lascannons, and a plasmagun is a lot of firepower).

If you can, I dont see why you wouldn't. It is a significant boost to have him tank non-AP2 wounds and then just chuck him when you don't care anymore.

I have seen something to this effect used. One of my Space Wolf opponents usually takes a Rune Priest formation. One of them is normally wearing Terminator armour and is placed in a Longfang squad. Normally he takes Divination, which can work well with the squad.

Specifically though, he has multiple wounds, can tank AP3 or higher, and has a good Look Out Sir; which can give you much greater control over casualty selection.