Question

All of the following are true regarding the convertability option under a term life insurance policy except?

A.Upon conversion, the premium for the permanent policy will be based upon attained age.
B.Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
C.Evidence of insurability is not required.
D.Most term policies contain a convertability option.

Answer 1

The death benefit of the permanent policy will not be reduced by 50% upon conversion under a term life insurance policy.

Step-by-step explanation:

The correct option is B. Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

In a term life insurance policy, the convertability option allows the policyholder to convert their term policy into a permanent policy without having to provide evidence of insurability. The premium for the permanent policy will be based on the insured's attained age at the time of conversion. However, the death benefit of the permanent policy remains the same and is not reduced by 50%.

It is important to note that not all term policies have a convertability option, but most do.