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What Is A Conversion Privilege?

If you have a term life insurance policy, or if you are shopping for one, then you want to make sure that your policy has a conversion privilege, also known as convertible term life. This is a provision that commits the insurer to renew the policy for a certain amount of time, regardless of a change in health or mental state of the insured. It essentially protects you from losing your life insurance coverage because of health issues.

Just imagine that you have a twenty year term policy, and in year 19 you develop cancer or you have a heart attack? You would be one year away from the end of your insurance policy with very limited or very expensive options. If you have a convertible term life policy, then you can convert your policy to permanent cash value life insurance without evidence of insurability. This means that you won't have to take a medical exam, and the insurance company cannot deny your option to convert your policy simply because you've developed health issues.

There are some limitations to the privilege. A life insurance company might limit you to take advantage of the conversion privileges for X amount of years, or until you reach a certain age. The limitations vary from company to company.

The conversion privilege is something that many agents don't talk about and many people with life insurance aren't even sure they have it. If you are ever in the position where you need it, then you'll be glad that you have the option.

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