DEFINITION of 'Conversion Privilege '
An insurance policy in which the insurer is required to renew or update the policy regardless of the insured's health. An insurance policy with this type of provision allows the insured to switch to a different type of policy without submitting to a physical examination.
BREAKING DOWN 'Conversion Privilege '
A conversion privilege also guarantees coverage and set premium payments for a certain number of years regardless of the health status of the insured. Term life insurance policies usually offer the conversion privilege option. This option allows you to convert your term policy to a permanent policy that will provide insurance for the rest of your life. Therefore, even if you are diagnosed with a serious illness at the end of your term policy, you will have the option to switch to a permanent policy without having to submit to another physical exam. In effect, this option protects the insured from being declined insurance based on a change in health.