What is a "convertible" term policy?

A "convertible" term policy is designed to offer policyholders flexibility by allowing them to convert their term life insurance coverage into a permanent life insurance policy, usually without the need for a medical exam. This feature is beneficial for individuals who may develop health issues during the term period that could make obtaining a new policy more challenging or expensive. By offering this option, insurers provide the policyholder with peace of mind that they can secure lifelong coverage as their situation changes.

The ability to convert is a significant advantage, particularly for those who may want the security of lifelong coverage but initially chose a more affordable term policy. This transition ensures that the insured can maintain coverage even if their health deteriorates.

The other options touch on aspects of insurance policies but do not accurately capture the essence of convertible term policies. For example, a premium discount does not pertain to the core feature of convertibility. Similarly, policies that cannot be changed or those covering specific circumstances do not align with the definition, which emphasizes the ability to transition to permanent coverage without medical scrutiny.