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. Options & Futures

    5 Life Insurance Questions You Should Ask

    Confused about $1 million dollar insurance advertising claims? Decide whether they'll pay off for you.
  2. Insurance

    What To Expect When Applying For Life Insurance

    Before jumping into a policy, check out these tips on how to score the best plan for you.
  3. Retirement

    5 Mistakes That Can Ruin Your Life (Insurance)

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

    Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ratings by Weis.
  5. Insurance

    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 there are times when it isn't.
  6. Insurance

    What are some examples of unexpected exclusions in a home insurance policy?

    Learn about commonly excluded perils with different standard insurance policies. Explore events that homeowners should consider when purchasing insurance.
  7. Thanks to the Affordable Care Act, you can no longer be denied health insurance for having a pre-existing or chronic medical condition.
    Insurance

    Choosing A Health Plan For Your Chronic Illness

    Thanks to the Affordable Care Act, you can no longer be denied health insurance for having a pre-existing or chronic medical condition.
  8. Four key factors to check out before you just sign up for dental insurance. The coverage could be really worth it – or not.
    Insurance

    Does That Dental Insurance Have Cavities?

    Four key factors to check out before you just sign up for dental insurance. The coverage could be really worth it – or not.
  9. Compared to other options, does it ever make sense to include cash-value life insurance in your investment portfolio?
    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.
  10. Insurance

    4 Steps to Finding the Right Health Plan

    Consumers buying health insurance on the individual market have more choice than ever. These steps can help lead you to the plan that's right for you.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center