Life & Health Insurance Exam (National Portion)Life InsuranceHard
A 40-year-old individual purchases a $500,000 convertible term life insurance policy. Five years later, they decide to convert it to a whole life policy. Which of the following statements is true regarding this conversion?
- AThe new whole life policy will have a premium based on the original issue age.
- BThe new whole life policy will have a premium based on the attained age.
- CProof of insurability will be required for the conversion.
- DThe death benefit of the convertible policy will increase upon conversion.
Show answer & explanationAnswer & explanation
Correct answer: B. The new whole life policy will have a premium based on the attained age.
When converting a term policy to a whole life policy, the new whole life premium is typically based on the insured's attained age (their age at the time of conversion), not their original issue age. This is because the new policy is being issued at that later date. However, no proof of insurability is required for the conversion itself.
Why the other options are wrong
- A. Only certain conversion options (like 'original age' conversion, which is less common or comes with a cost adjustment) would use the original issue age; standard conversion uses attained age.
- C. A key benefit of a convertible term policy is that conversion does not require proof of insurability.
- D. The death benefit usually remains the same upon conversion, unless the policyowner chooses to purchase a different amount of coverage.
Convertible Term Life Insurance
A term life insurance policy that includes a provision allowing the policyowner to convert it into a permanent (whole life or universal life) policy without providing proof of insurability.
- Conversion must occur within a specified period.
- No proof of insurability required for conversion.
- New policy premiums are typically based on the insured's attained age.
- Allows for transition from temporary to permanent coverage as needs change.
Memory trick: Convert term to perm: No health check, but your age matters for price.