What the privilege is actually worth
The value of a conversion privilege is not the permanent policy. It is the absence of underwriting. A client who was healthy at issue and is not healthy now can convert at their original risk class, and no medical evidence is required. For a client who has become uninsurable, that privilege is the difference between having permanent coverage available and not having it available at any price.
Which is exactly why the deadline matters more than almost anything else in a term book, and why it is worth knowing for every policy rather than for the clients who happen to call.
The two clocks
Nearly every convertible term contract limits the privilege two ways at once, and the privilege ends when the first of them is reached.
- 01
A number of policy years
Often the first several years of the term, or the full level period, depending on the product. This clock starts at the policy date, not the application date and not the date the client thinks they bought it.
- 02
An attained age
A stated age of the insured — frequently somewhere in the sixties or early seventies. Because it is computed on the insurer's age basis, which for some carriers is age nearest birthday rather than age last birthday, it can fall up to six months earlier than a client's arithmetic suggests.
What you can convert into, and what you cannot
- The permanent products available for conversion are the ones the carrier designates, and that list changes over time. The product available at conversion is frequently not the product that was available at issue.
- Many contracts permit partial conversion, so a client can convert a portion of the face amount and let the rest run to the end of the term. This is often the answer nobody offers.
- Riders generally do not travel automatically. Some can be carried across, some must be re-applied for with evidence, and some simply end.
- Some carriers offer a conversion credit — a portion of term premium applied toward the first year of the permanent policy — usually only within a limited window early in the term.
- The risk class travels; the age does not. Premium is computed at the attained age at conversion, at the original class.
Why nobody reminds you
Carriers are not obliged to chase a conversion, and a conversion is not commercially urgent to them. Where a notice is sent it goes to the policyholder, at the address of record, in an envelope that looks like every other insurer envelope. The agent is not usually copied. In practice the deadline is enforced only by whoever wrote it down, and if the policy came from another agent, a group plan or a direct writer, nobody wrote it down at all.
Building the list from what you already hold
- 01
Take the policy date from the schedule page
Not the application date and not the client's recollection. The policy date is what both clocks are computed from.
- 02
Find the conversion provision in the contract
It states both limits. Record both, and record which one binds for that specific insured, because the answer differs client by client.
- 03
Confirm the age basis with the carrier
Age nearest and age last birthday produce deadlines up to six months apart. This is the single most common arithmetic error.
- 04
Set the reminder years early, not months
A conversion involves a product decision, an illustration and a client conversation. A thirty-day warning on a deadline like this is a warning about something you can no longer do well.
Briar derives these dates from carrier documents as they arrive and tracks a milestone at five years, two years, one year, six months and thirty days before each one — each firing exactly once. The derivation costs nothing to run because it is arithmetic on dates already extracted, not a question asked of a model.