A:

A convertible insurance policy is a term usually related to life insurance. To understand a convertible policy, you must first understand term and universal policies.

"Term" life insurance is a policy that provides the insured person coverage for a certain period of time. On the other hand, a "whole" or "universal" policy is considered permanent, providing coverage for the entire life of the insured.

Now, a "convertible term" policy allows the insured to covert a term policy to a permanent policy at a later date. As long as the conditions of the policy have been maintained and payments made on time, the insured person is not required to undergo any new or additional screening at the time the policy is converted, regardless of his/her medical condition. This type of policy provides the benefit of obtaining less expensive term life insurance now while maintaining the option to convert to a permanent policy at a later date as insurance needs and financial resources change.

For more on this read, Buying Life Insurance: Term vs. Permanent.

This question was answered by Katie Adams.

RELATED FAQS
  1. What is the difference between the death benefit and cash value of an insurance policy?

    Understand the difference between the various components of a life insurance policy including the death benefit and a policy's ... Read Answer >>
  2. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  3. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
  4. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  5. I am 58 years old with a term life insurance for 100,000. My agent is recommending ...

  6. Can your life insurance company sue you?

    Find out when life insurance companies have the right to recover claims. Learn about the most common reasons why a life insurance ... Read Answer >>
Related Articles
  1. Insurance

    3 Reasons to Avoid Term Insurance

    Find out the reasons why term life insurance may not be for everybody, and why you may want to avoid it in favor of a permanent life insurance policy.
  2. Retirement

    5 Mistakes That Can Ruin Your Life (Insurance)

    Don't let these simple errors leave you unprotected. Read on to learn more.
  3. Savings

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  4. Options & Futures

    Permanent Life Policies: Whole Vs. Universal

    If you're looking for life-long security, choosing between these two is the key.
  5. Insurance

    What's Better: Whole Life or Term Insurance?

    Life insurance can be a difficult decision to make, especially for a young adult. Here's a look at the benefits and costs of getting whole life insurance.
  6. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  7. Trading Strategies

    How Good An Investment Is Life Insurance?

    Compared to other options, does it ever make sense to include cash-value life insurance in your investment portfolio? A look at the pros and cons.
  8. Budgeting

    The Best Type Of Life Insurance For You Right Now

    Different stages of life call for different amounts of life insurance coverage. Find out what you need, when and why.
  9. Insurance

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  10. Insurance

    Which Life Insurance is Right For You?

    Consumers have choices when it comes to life insurance. Knowing your future needs for cash or retirement can make the difference in what you select.
RELATED TERMS
  1. Convertible Insurance

    A type of life insurance that allows the policyholder to change ...
  2. Conversion Privilege

    An insurance policy in which the insurer is required to renew ...
  3. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  4. Cover Note

    A temporary document issued by an insurance company that provides ...
  5. Key Person Insurance

    A life insurance policy that a company purchases on a key executive's ...
  6. Insurance Coverage Area

    The geographic region in which an insurance policy’s benefits ...
Trading Center