Term-to-permanent conversion underwriting: which statement is TRUE?

Term-to-permanent conversion underwriting: which statement is TRUE?

• A. New underwriting based on insurability.
• B. A medical exam is required for all conversions.
• C. The death benefit becomes zero during conversion.
• D. The policy automatically terminates.

Answer: (A)

When converting term to permanent, the process treats the new permanent policy as a fresh application in terms of risk assessment. The insurer underwrites the new policy based on current insurability—your health, age at conversion, and other factors at that time determine the premium and coverage for the permanent policy. This means you aren’t simply carrying over the old term terms; you’re entering a new underwriting review that sets the rate for the permanent coverage. The other statements don’t fit because a medical exam isn’t guaranteed for every conversion, the death benefit doesn’t drop to zero during conversion, and the policy does not automatically terminate simply because you’re switching to permanent coverage.

When converting term to permanent, the process treats the new permanent policy as a fresh application in terms of risk assessment. The insurer underwrites the new policy based on current insurability—your health, age at conversion, and other factors at that time determine the premium and coverage for the permanent policy. This means you aren’t simply carrying over the old term terms; you’re entering a new underwriting review that sets the rate for the permanent coverage.

The other statements don’t fit because a medical exam isn’t guaranteed for every conversion, the death benefit doesn’t drop to zero during conversion, and the policy does not automatically terminate simply because you’re switching to permanent coverage.