West Virginia State Life Insurance Practice Exam

What provision allows a policyholder to convert a term life policy to a permanent one without proving good health?

1. Renewal Clause

2. Conversion Provision

3. Waiver of Premium

4. Term Conversion

The correct answer is: Conversion Provision

The provision that allows a policyholder to convert a term life policy to a permanent one without having to prove good health is known as the Conversion Provision. This feature is particularly valuable because it provides flexibility for policyholders who may wish to secure lifelong coverage as their circumstances change or as they age. With the Conversion Provision, once the term policy reaches its end or the policyholder decides to convert it, they can switch to a permanent policy, such as whole life or universal life, without undergoing a medical examination or providing evidence of insurability. This is particularly advantageous for individuals who may have developed health issues during the term of the policy, making it difficult or costly to obtain new life insurance coverage. The other options do not specifically offer the same benefits as the Conversion Provision. For instance, a Renewal Clause refers to the option of renewing a term policy for a certain period typically reflecting an increase in premium rates, while the Waiver of Premium feature allows for premiums to be waived under specific circumstances, such as disability. The term 'Term Conversion' is vague in this context, as it does not denote a standardized provision within life insurance policies. Therefore, the Conversion Provision is the correct answer, as it explicitly provides the right for policyholders to convert their