What is a convertible insurance policy?

By Katie Adams AAA
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.

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