What does "convertibility" in life insurance refer to?

Convertibility in life insurance specifically refers to the provision that allows a policyholder to convert a term life insurance policy into a permanent life insurance policy without the need for additional evidence of insurability. This feature is particularly valuable for policyholders who may have developed health issues since they took out the original policy, which would otherwise make obtaining a new policy challenging or impossible. The conversion typically allows for the retention of the original issue age, meaning the cost of the new permanent policy will be based on the age at which the term policy was issued, rather than the policyholder's current age.

This feature is essential because it provides a safety net for policyholders, ensuring they can maintain life insurance coverage even if their health status changes. It empowers clients to make decisions that align with their ongoing financial planning and future needs without being penalized for health conditions that may arise after the original policy was issued. Therefore, the first choice accurately captures the essence of convertibility in life insurance.