QFA Life Assurance Practice Test

A term conversion option allows a policyholder to change their term life insurance policy into a permanent life insurance policy without having to undergo a new medical examination. This is a particularly advantageous feature for the policyholder, as it provides the opportunity for continued coverage even if their health status has changed since the original policy was issued.

The term conversion option is essential for individuals who may have health concerns that could prevent them from obtaining permanent coverage at a later date or could lead to significantly higher premiums if they were to apply for a new policy altogether. By utilizing the conversion option, they can maintain life insurance coverage while potentially locking in lower rates associated with their original policy.

This feature is designed to ensure that policyholders maintain protection without the risk of being denied coverage due to health changes. It represents the flexibility that many seek in long-term financial planning regarding life insurance needs.