What is a convertible term policy?

A convertible term policy is specifically designed to provide the policyholder with the option to convert their term life insurance into a permanent life insurance policy without undergoing additional medical underwriting. This feature is beneficial because it allows individuals who may develop health issues while holding the term policy to secure a permanent policy that they might otherwise find challenging to obtain if they were to apply for a new life insurance policy.

The ability to convert means that even if the term period expires, the insured can transition to a permanent policy (like whole life or universal life) that typically has lifelong coverage and may also accumulate cash value. This aspect of convertibility adds a layer of financial security and flexibility for the policyholder.

Other options describe features that do not align with the concept of a convertible term policy. For example, the idea of a term policy without a duration limit refers more to permanent policies rather than term insurance. Additionally, transferring a policy to another person is related to ownership rights, while variable premiums refer to flexible premium structures, common in products like universal life insurance, but not typically associated with standard term policies. Hence, option C accurately captures the essence of a convertible term policy.