Convertible Term Insurance: Conversion Rights on the LLQP Exam
A convertible term policy gives the owner the right to exchange the term coverage for a permanent policy — whole life or universal life — without providing any evidence of insurability, before the contract's deadline.
Why it matters on the LLQP exam
Conversion is one of the two star features of term insurance, and the exam tests exactly what is guaranteed and what is not:
- No medical evidence, ever. Even if the insured has developed a serious condition since issue, the insurer must honour the conversion.
- New premium at attained age. The permanent policy is priced using the insured's age at conversion, not the age when the term policy was issued. Expect a question offering "the original age premium" as a distractor.
- Deadlines apply. Contracts limit conversion — commonly to before a stated age (often 60 or 65) or within the early years of the term. Miss the window and the right is gone.
- Many contracts allow partial conversions, converting only part of the face amount and keeping the rest as term.
The classic scenario: an insured is diagnosed with heart disease mid-term. With a convertible policy, they can lock in permanent coverage without any health questions. Without the privilege, they would likely be declined or heavily rated.
Example question
Liam bought a convertible Term 20 policy at 32. At 40, after being diagnosed with a chronic condition, he converts the full amount to whole life. Which statement is correct?
- The insurer may decline the conversion due to his diagnosis
- His whole life premium is based on his age at 32
- The insurer must allow conversion, with premiums based on his age 40
- He may convert only if he passes a simplified medical
Answer: C — conversion requires no evidence of insurability, but the new premium reflects the attained age at conversion.
Pair this with renewable term — the exam constantly swaps the two — and review term insurance basics plus the life insurance and taxation hub.