What does the term "conversion privilege" refer to in life insurance policies?

The term "conversion privilege" in life insurance policies specifically refers to the right of the policyholder to convert a term life insurance policy into a permanent life insurance policy without having to provide evidence of insurability. This means that if a policyholder decides to convert their term policy, they can do so without undergoing medical underwriting or proving their current health status. This feature is particularly beneficial as it allows individuals to secure lifelong coverage even if their health has declined since the original policy was issued.

The conversion privilege is designed to protect policyholders by ensuring that they can obtain permanent coverage even if they develop health issues during the term of their original policy. This flexibility can provide added peace of mind, knowing that their life insurance needs can continue to be met regardless of changes in health conditions.

Other options do not capture the essence of what conversion privilege means. For example, transferring coverage to another provider relates to a different concept, while downgrading benefits or adding riders does not align with the definition of conversion privilege. Therefore, the correct answer clearly addresses the unique right of conversion from term to permanent insurance without the need for additional health assessments.