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.

RELATED TERMS
  1. Insurance

    A contract (policy) in which an individual or entity receives ...
  2. Term Life Insurance

    A policy with a set duration limit on the coverage period instead ...
  3. Convertible Insurance

    A type of life insurance that allows the policyholder to change ...
  4. Without Evidence of Insurability

    The ability to acquire a policy, such as life or health insurance, ...
  5. Cover Note

    A cover note is a temporary document issued by an insurance company ...
  6. Personal Lines Insurance

    Personal lines insurance includes property and casualty insurance ...
Related Articles
  1. Financial Advisor

    Buying a Life Insurance Policy? Read This First

    Knowing who needs life insurance, how it works and the different types of insurance can help consumers make informed decisions about this product.
  2. Financial Advisor

    Advising FAs: Explaining Life Insurance to a Client

    Life insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death.
  3. Financial Advisor

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
  4. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  5. Financial Advisor

    Permanent Life Policies: Whole vs. Universal

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

    Life Insurance: putting a Price on Peace of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  7. Financial Advisor

    Is Life Insurance From Your Employer Enough?

    Covering the needs of the ones you would leave behind is not easy. But efforts to secure a life insurance policy outside of work should pay off.
  8. Personal Finance

    The Best Life Insurance for Military Families

    Two of the most common types of life insurance are term and whole life. Here's why the latter isn't a good idea for most military families.
  9. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  10. Insurance

    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.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
Hot Definitions
  1. Earnings Per Share - EPS

    Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock.
  2. Trustee

    A person or firm that holds or administers property or assets for the benefit of a third party. A trustee may be appointed ...
  3. Gross Domestic Product - GDP

    GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
  4. Debt/Equity Ratio

    The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.
  5. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  6. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
Trading Center