Conversion Privilege

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Market Conversion Price

    An investor's effective cost to purchase common stock when it ...
  2. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  3. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  4. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire ...
  5. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  6. Traditional Whole Life Policy

    A type of life insurance contract that provides for insurance ...
Related Articles
  1. 5 Life Insurance Questions You Should ...
    Options & Futures

    5 Life Insurance Questions You Should ...

  2. What To Expect When Applying For Life ...
    Insurance

    What To Expect When Applying For Life ...

  3. 5 Mistakes That Can Ruin Your Life (Insurance)
    Retirement

    5 Mistakes That Can Ruin Your Life (Insurance)

  4. How the Affordable Care Act Changed ...
    Insurance

    How the Affordable Care Act Changed ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center