What does a "conversion privilege" in life insurance allow the policyholder to do?

A "conversion privilege" in life insurance specifically allows the policyholder to change a term insurance policy into a permanent insurance policy, such as whole life or universal life, without having to provide evidence of insurability. This is particularly beneficial for individuals whose health status may have changed during the term of the policy, as it ensures that they retain the ability to obtain lifelong coverage despite any potential risk factors.

This feature is important because it provides policyholders with flexibility and security regarding their life insurance needs. The conversion can usually be done at specified times outlined in the policy (such as before the term expires) and helps ensure that the insured can continue to have coverage even as their situation or health changes.

Other choices explore different features that life insurance policies might offer but do not accurately describe what a conversion privilege entails. For example, canceling a policy, reducing premiums, or increasing coverage without additional costs pertains to different provisions or options within life insurance contracts.