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WHAT IS CONVERTIBILITY IN TERM INSURANCE

This is your right to replace your term (temporary) policy with a permanent coverage within a specific time period, without having to show evidence of insurability.

This feature also enables you to have coverage with term policy until you can buy a permanent life insurance in later time (which tends to have higher premiums.)

You should pay attention to the provisions in your term policy as to how the conversion will be applied at the time when you want to convert your policy. You have an option of converting your term policy (1) as of the original date of the policy or (2) as of the current date. If your policy is converted as of the original date of your policy, conversion is referred to as the retroactive conversion, and if your policy is converted as of the original date of your policy, your conversion is referred to as attained age method. Needles to mention, when attained age methods is used, your premiums will be lower than the attained age method. However, the offsetting fact would be, where you need to make a lump-sum payment equal to the difference in the reserves or premiums plus interest on the old and the new new policies.