Florida 2-15 Insurance License Practice Exam

Term conversion in life insurance policies refers to the ability of a policyholder to convert their term life insurance policy into a permanent life insurance policy without the need for a medical examination. This feature is significant because it allows the insured to maintain coverage even if their health status changes, which might make obtaining new coverage more difficult or expensive.

When a term policyholder exercises this conversion option, they can transition to a permanent policy, such as whole life or universal life, which remains in effect for their entire lifetime instead of just for a specified term. This conversion process typically involves specific timelines and conditions outlined in the policy, but it fundamentally provides security and flexibility, ensuring that the policyholder can adapt their insurance coverage to their long-term needs.

Other options, like changing the beneficiary or lowering premiums, do not pertain to the unique benefit of maintaining insurability and flexibility by converting to a permanent policy. Transferring coverage to another insurer also does not capture the essence of what term conversion entails.