What does the conversion privilege allow in term insurance?

The conversion privilege in term insurance is a significant benefit that permits policyholders to convert their term policy to a whole life policy without needing to provide evidence of insurability. This means that when the term coverage expires, or at certain designated times during the term, the insured can change their policy type to a whole life policy, which builds cash value and offers lifelong coverage.

This privilege is particularly valuable for individuals who may experience health changes over the years. If, at the time of conversion, the insured is in poorer health, they are still able to benefit from whole life insurance without undergoing a new medical examination or providing health information, which could otherwise result in higher premiums or denial of coverage.

In contrast, while options like renewing a term policy at a higher premium or adding riders to the existing coverage may be features of some term policies, they do not pertain to the specific capability of changing the policy type under the conversion privilege. Additionally, transferring ownership of the policy does not relate to the conversion privilege, as it pertains to administrative rights rather than the nature of the coverage itself.