What is "conversion privilege" in term life insurance?

The concept of "conversion privilege" in term life insurance specifically refers to the policyholder's ability to convert their term life insurance policy into a permanent life insurance policy without undergoing additional medical underwriting. This is particularly valuable because it allows individuals to secure life insurance coverage even if their health status changes over time.

When a term policy is converted to a permanent policy, the policyholder can usually do so at a predetermined point in their coverage period, often without the need to provide further proof of insurability. This is an important benefit because it protects the policyholder from possible declines in health that could make obtaining new coverage difficult or more expensive later on. It also allows them to continue their coverage seamlessly, transitioning from a temporary term product to more enduring life insurance solutions like whole or universal life.

The other options do not accurately represent the nature of what a conversion privilege entails in the context of life insurance, which is focused on maintaining coverage according to changing needs rather than altering the type of coverage or insurer without an increase in health risks assessment.