Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

Convertible term insurance is characterized by its feature that allows policyholders to convert their term policy into a permanent life insurance policy without having to undergo additional underwriting assessments. This means that when the term expires or at any point during the term, the insured can choose to switch to a whole life or another type of permanent policy, typically at their current health status, which may be more beneficial as age or health may affect insurability and premiums.

This option provides flexibility and security to the policyholder, ensuring that they have coverage that can last a lifetime, rather than being limited to the term of the original policy. Such a feature is particularly valuable as it allows individuals to adapt their insurance coverage to their evolving insurance needs without the potential limitations and costs that can arise from being underwritten again at a later age or when health issues may arise.

The other options do not accurately describe convertible term insurance. Maintaining premiums for the entire term pertains more to whole life policies, reduced death benefits over time typically relates to decreasing term insurance, and availability based solely on age misrepresents the flexibility and accessibility that convertible term insurance offers to policyholders across various age groups.