Definition - What does Conversion Privilege mean?
A conversion privilege is a policy provision the gives policyholders the right to convert or update their policy even in the event of a serious change in health condition. In other words, it forbids insurance companies from changing the price of premiums or otherwise altering the policies of those who develop serious illnesses or other health problems.
It may also be known as a guaranteed insurability option.
Insuranceopedia explains Conversion Privilege
Term life insurance policies often include a conversion privilege and are also known as convertible term life policies. In this case, the policyholder can convert their policy to a permanent one without being subject to a medical examination, even if they develop a serious health condition. In essence, this provision ensures the policyholder remains insurable, regardless of a decline in health.