What is a convertible term life insurance policy?

A convertible term life insurance policy is designed to give the policyholder the option to convert their term coverage into a permanent life insurance policy, such as whole life or universal life, without the need for a medical examination. This feature is particularly beneficial as it allows individuals to secure a life insurance policy while they are younger and potentially healthier, and then later convert without worrying about their health status influencing the rates or the ability to obtain coverage.

As individuals age or if their health changes, obtaining a new permanent policy could become more expensive or even unfeasible. The ability to convert means that as long as the term policy is active, the policyholder can plan for their future coverage needs without facing additional underwriting hurdles. This flexibility is a major advantage of convertible term life insurance policies and addresses the changing needs of individuals as their life circumstances evolve.

Other options in the question do not accurately describe a convertible term life insurance policy. For instance, a policy allowing for increased coverage without additional premiums does not capture the essence of convertibility, as this is not a standard feature. Similarly, policies that simply terminate after a certain period or provide coverage for a fixed term do not offer the flexibility that conversion provides.