Convertible Term Insurance
Convertible term is life insurance that pays out a guaranteed lump sum in the event of the death of the insured person within the term of the plan.
If desired, critical illness cover may be included, at an extra cost. Critical illness cover can normally only be included when the policy is originally taken out.
The cover will end on a specified date, which will be detailed in the policy document.
There will be no cash return, except in the event of a claim within the term of the cover.
Convertible term is the same as level term insurance, but with the extra option of being able to 'convert' the cover into another life cover plan, usually a whole life policy, offered by the provider at the time of conversion without any medical evidence and with guaranteed acceptance.
This means that the conversion option can be exercised even if the insured person is in very poor health.
The option to 'convert' can usually be exercised at any time prior to the expiry of the original convertible term plan, but occasionally, the option to convert may end before the actual cover ends.
If the plan is 'converted' into another plan, the cost of the new plan will usually be based upon the age of the applicant at the time the plan is converted.
If the premiums of the convertible term plan are guaranteed, this means they are fixed and will not increase for the duration of the convertible term plan, unless indexation has been selected at outset, in which case the premiums and the sum assured will increase in line with the chosen indexation.
If the premiums are reviewable, your premiums can be increased if your insurance company has heavier than expected claims from its other customers.
