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Convertible

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.

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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.

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