What Does Convertible Mean?
Convertible refers to a feature in a term insurance policy that allows a policyholder to convert a limited term policy to a permanent one before the term expires and without presenting any evidence of insurability. The latter means that the policyholder does not have to submit to a medical examination for eligibility, but the insurance company is obligated to insure them at the same state of risk as in the original term policy.
Insuranceopedia Explains Convertible
The advantage of term insurance with a convertible feature is that a person can buy maximum life insurance at the lowest premium (term premium) while building up their current finances, with the expectation that eventually, their improved financial condition can afford a permanent benefit later on without forfeiting their original state of insurability. A term life insurance covers a shorter period, while permanent life insurance lasts for the entire life of the insured.