What is a "term conversion option"?

A term conversion option is a valuable feature in life insurance policies that enables a policyholder to convert their existing term life insurance policy into a whole life insurance policy without the need for a new medical examination. This conversion can usually be done at specified times during the term of the policy and allows for the accumulation of cash value in the whole life policy, which is a significant advantage.

This option is particularly appealing to policyholders who may have developed health issues during the term of their policy, as it provides an opportunity to secure lifelong coverage without the risk of being declined due to health changes that could occur during a medical re-evaluation. Additionally, it ensures that the policyholder can retain some level of life insurance protection as their needs evolve over time.

The other options do not correctly define the term conversion option or do not relate to the key features of life insurance policies effectively. For instance, increasing the term length without additional costs does not encompass the essence of converting to a whole life policy, and changing beneficiaries or canceling a policy involves different processes and implications entirely.