Can I replace the 500GB SSD with a 1TB SSD

Before we go down this path lets first review what it will take to get to the custom Apple PCIe blade SSD: iMac Intel 27" EMC 2639 SSD Replacement its quite a lot of work! And if you've never opened one of these newer 'Thin Series' iMacs its a bit risky as you need to be very careful taking the display off. Many people have damaged it in the process which would be a very expensive mistake!

While the SSD is replaceable the special SSD is not easy to find in the larger sizes. Review your SSD going to 'About This Mac' > System Report. The SSD your system has if I remember correctly is a PCIe 2.0 x4 (4 lanes) so far the 3rd party companies only offer a 2 lane part so while they offer larger sizes the I/O speed will be slower. And they are expensive as well!

So what about adding a second drive? While not as fast SATA III (6.0 Gb/s) it might be good enough to host your data. Leaving the SSD as your boot drive hosting your OS & Apps. You could go with either a SSHD (3.5") or if you want a SSD (2.5").

If speed is the more important then you need to go externally! The Thunderbolt port is faster than the internal SATA port and very close to the PCIe SSD (depending on the drives you use). I would recommend going with either a 2 bay or 4 bay RAID unit and put your own 2.5" SSD's into it.