What is "convertibility" in a term life insurance policy?

Convertibility in a term life insurance policy refers to the option that allows policyholders to convert their term insurance into a permanent life insurance policy, such as whole life or universal life, without needing to undergo a medical examination. This provision is particularly valuable for those whose health may change during the term of their policy. By taking advantage of convertibility, policyholders can secure lifelong coverage and potentially build cash value, which is a characteristic of many permanent policies.

This feature provides flexibility and peace of mind, as it enables individuals to adapt their insurance needs as life circumstances change, such as aging or experiencing health issues. The ability to convert is usually available for a certain period or until reaching a specific age, depending on the terms of the policy.

The other options do not accurately define convertibility. Increasing benefits annually pertains to riders that enhance coverage over time, converting premiums into cash value relates to how permanent policies function, and canceling for a full refund describes the cancelation and surrender process rather than the conversion feature.