Retroactive Conversion
What Does Retroactive Conversion Mean?
Retroactive conversion occurs when a life insurance policy is converted to its cash value. In this process, instead of the cash value starting to accumulate from the conversion date, it is calculated from the original issue date of the policy. As a result, the cash value is significantly higher than what would typically be expected.
Insuranceopedia Explains Retroactive Conversion
Retroactive conversion can be an attractive option for individuals who initially choose term life insurance but later wish to switch to a cash value policy. This feature adds flexibility to term life insurance and provides an extra incentive for people to purchase coverage. A significant amount of cash value can accumulate if the term policy remains in effect for several years before being converted to a cash value policy.
