What is 'Conversion Privilege '
Conversion privilege is 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. The conversion privilege provision allows an employee that participates in a group plan to convert their group life insurance policy into an individual life insurance policy with little hassle, without having to go through another approval process or a medical exam. The life insurance company will extend coverage based on the fact that they were already approved as part of the group life insurance plan.
In some situations, an individual can continue to receive a group discount even though they're no longer part of the group. In order to qualify for this provision, the insured needs to notify the life insurance company within 31 days of termination of employment with the group policyholder. If someone waits until after 31 days, they will have to go through a new approval process in order to get an individual life insurance policy. This might entail a new medical exam even if you work with the same company.
Term Life Conversion Privilege
Term life insurance policies usually offer the conversion privilege option. This provision allows a policyholder to convert a term policy to a permanent policy that will provide insurance for the rest of someone's life. Therefore, even if diagnosed with a serious illness at the end of a term policy, a person will still be able to switch to a permanent policy without having to submit to another physical exam. By default, this option protects the insured from being denied insurance based on a changes to their health.
Just like any type of life insurance coverage, the premium goes up the longer someone waits. If health or life insurance needs have changed, it is best to review their conversion options. Term life insurance conversion will cost more than traditional medical underwriting. A prospective policyholder can save more money by converting when policy needs have changed rather than waiting to the very end of your term life insurance policy. Life insurance conversion require no evidence of insurability and is guaranteed regardless or past or present health.
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Term Life Insurance
A policy with a set duration limit on the coverage period instead ... -
Insurance
Insurance is a contract (policy) in which an insurer indemnifies ... -
Decreasing Term Insurance
Decreasing term insurance is a renewable term life insurance ... -
Traditional Whole Life Policy
A traditional whole life policy is a type of life insurance contract ... -
Variable Life Insurance
Variable life insurance is permanent life insurance product with ... -
Wholesale Life Insurance
A type of employer-sponsored protection against the loss of income ...
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