How does conversion of a policy affect coverage?

The conversion of a policy allows the policyholder to switch from a term insurance policy to a permanent insurance policy without having to provide evidence of insurability. This is significant because term policies generally offer coverage for a limited period, while permanent policies provide lifetime coverage, assuming premiums are paid. The ability to convert can be particularly advantageous as it enables individuals to maintain coverage as their needs change over time, especially if their health status may make obtaining new insurance difficult in the future.

In this context, the conversion process typically includes features like guaranteed issue, which means the insurer cannot deny the conversion based on health factors, making it a valuable option for policyholders who want to ensure continuous coverage. Understanding this aspect of policy conversion is critical in guiding clients toward making informed decisions about their insurance needs and how their coverage can adapt over time.