What does the term "conversion privilege" refer to in life insurance?

The term "conversion privilege" in life insurance specifically refers to the ability for a policyholder to convert a term life insurance policy into a permanent life insurance policy without the need for medical underwriting. This feature is particularly valuable because it provides an opportunity for individuals who may have developed health issues since they originally purchased their term policy to secure permanent coverage without facing additional health assessments or potential denial of coverage.

This conversion can typically be done within a specified time frame or before the term policy expires, and it allows the policyholder to lock in their insurability status while potentially benefiting from the longer-lasting coverage that a permanent policy offers. Understanding this privilege is important, as it highlights the flexibility and security provided to policyholders in managing their life insurance needs over time.