A term conversion is a contractual right where a term insurance (policy or benefit) is being converted to a permanent insurance. In circumstances where a client’s protection would be reduced, this would be considered a replacement. … However, if the $200,000 term were to be cancelled, it would be a replacement.

Is a term conversion considered a replacement?

Term Conversion: A term policy on the life of an insured which is exchanged for a permanent policy on the same insured during the contractual convertibility period without need for underwriting. Term to Term Replacements: Exchanging a Term policy for another Term policy is not considered a term conversion.

What is a conversion option on a term life insurance policy?

A conversion privilege within a term life policy allows a policyholder to convert a term policy to a permanent policy that will provide insurance for the rest of someone’s life.