Convertible Term

A client wanting the option to convert to permanent coverage later without a medical exam should choose:

1. A.Convertible term insuranceCorrect - conversion without a new exam.
2. B.A fixed annuityA fixed annuity is an accumulation vehicle with no face amount to convert. Conversion presupposes existing death benefit coverage that can be changed in form.
3. C.AD&D coverageThis is confined to accidental death and carries no privilege to become permanent coverage. It supplements a policy rather than being one that can be converted.
4. D.Nonconvertible termThis is the direct opposite of what the client asked for. Nonconvertible term is priced on the assumption that no conversion right exists, so obtaining permanent coverage later would demand fresh underwriting.

Why: Convertible term allows conversion to permanent coverage without new evidence of insurability.

A convertible term policy allows the owner to:

1. A.Convert to permanent coverage without a new examCorrect - conversion without proving insurability.
2. B.Change the insuredConversion changes the kind of policy, not whose life it covers. Substituting a different insured would present an entirely new mortality risk and would require full underwriting on that person.
3. C.Extend the term forever freeConfuses convertible with renewable, and overstates even that. Renewable term costs more at each renewal and stops at a stated age; conversion moves the coverage into a permanent policy priced as permanent insurance.
4. D.Cash it out for the face amountNo life policy pays its face amount to a living owner. Term insurance has no cash value to surrender, and conversion is an exchange for permanent coverage rather than a payout of any kind.

Why: Convertible term can be converted to permanent coverage without new evidence of insurability.

Fenwick owns a whole life policy on his own life. He wants term coverage on his wife, who has no coverage of her own, attached to that same contract rather than bought as a separate policy. Which rider accomplishes this?

1. A.A payor benefit rider.A payor benefit rider sits on a juvenile policy and waives premiums if the adult who pays them dies or becomes disabled. It provides no death benefit on the adult.
2. B.A guaranteed insurability rider.A guaranteed insurability rider lets the BASE insured buy additional coverage on his own life at scheduled option dates without evidence. It never covers a second person.
3. C.An OTHER-INSURED, or spouse, rider: term insurance on a person other than the base insured, attached to the base policy.Correct. The rider covers the wife under Fenwick's contract, usually more cheaply than a small standalone policy, and typically carries a conversion privilege for her.
4. D.A waiver of premium rider.Waiver of premium keeps the policy in force without payment if the BASE insured becomes totally disabled. It adds no coverage on any other life.

Why: An OTHER-INSURED rider, often called a spouse rider or additional-insured rider, adds term insurance on a person other than the base insured to an existing policy. It is convenient and usually cheaper than a small standalone policy because it shares the base contract's issue costs, and it commonly carries a conversion privilege letting the covered person obtain individual permanent coverage without evidence of insurability. The rider terminates on its own schedule, and often on divorce or on the base insured's death, subject to that conversion right.

A client wants the ability to convert term coverage to permanent without a new medical exam. They need:

1. A.Convertible termCorrect - convert without a new exam.
2. B.Decreasing termNames a benefit pattern rather than a conversion right. A decreasing policy might happen to be convertible, but the feature the client is asking for is the convertibility provision itself.
3. C.A single-premium annuityNot life insurance, so there is nothing to convert. An annuity cannot be turned into permanent coverage under a conversion privilege.
4. D.A MECA tax classification that lands on an overfunded contract. It is a consequence to steer around, not a feature that grants permanent coverage without underwriting.

Why: A convertible term policy allows conversion to permanent insurance without new evidence of insurability.