What is the purpose of a "conversion option" in term insurance?

The purpose of a "conversion option" in term insurance is primarily to provide policyholders the flexibility to convert their term life insurance policy into a permanent life insurance policy. This option is beneficial for individuals who may initially choose a term policy due to its lower cost but later decide they want the lifelong coverage associated with a permanent policy.

This conversion typically occurs without requiring evidence of insurability, meaning that the insured does not have to undergo additional health assessments or prove their health status to convert. Therefore, even if a policyholder's health deteriorates over the years, they can still secure permanent coverage. This feature adds significant value to term insurance as it allows for adaptability in an individual's life insurance needs as circumstances change.

While increasing the death benefit and adjusting premium payment frequency may be relevant aspects of life insurance, they do not specifically pertain to the unique purpose of a conversion option. Converting to a higher premium could imply moving to a more expensive policy, but this does not encapsulate the primary function of the conversion option itself.