Oklahoma Life Producer Practice Exam

Which feature allows a term insurance policy to convert to permanent insurance without evidence of insurability?

1. Renewable clause

2. Convertible option

3. Guaranteed conversion

4. Permanent switch

The correct answer is: Convertible option

The feature that allows a term insurance policy to convert to permanent insurance without evidence of insurability is known as the convertible option. This provision provides policyholders the flexibility to transition from term coverage, which is typically temporary, to a permanent life insurance policy, which offers lifelong coverage and may also accumulate cash value. The critical aspect of the convertible option is that it does not require the insured to provide any further proof of health or insurability at the time of conversion, making it particularly valuable for individuals who may develop health issues after the original policy was issued. This option is crucial for ensuring that insured individuals can maintain coverage even if their health status changes, thereby converting to a policy that meets their long-term needs without facing potential denial due to changes in health. Understanding the advantages of convertible options helps agents guide clients toward suitable life insurance strategies, ensuring peace of mind and long-term financial planning.