If a policyowner converts a term life policy, what happens to the policy?

• A. The term policy remains term but with a higher premium
• B. The term policy will be replaced by a permanent life insurance policy
• C. It becomes a universal life policy automatically at conversion
• D. The policy is extended for another term

Answer: (B)

Converting a term life policy moves you from temporary protection to permanent protection. The conversion privilege lets you exchange the term contract for a permanent policy without needing evidence of insurability, and the new permanent policy takes effect when the conversion is completed. because you’re switching to a permanent policy, the term contract ends and is effectively replaced. The new policy’s premium is based on your attained age at conversion, so it’s usually higher than your term premium, but you gain lifelong coverage and, in many permanent plans, a cash value. It isn’t simply extended for another term, and it isn’t guaranteed to become universal life automatically; you end up with a permanent policy such as whole life (or another permanent option) offered by the insurer.