What are two key features of Term Insurance?

Term insurance is primarily designed to provide life insurance protection for a specified term, and its key features reflect that purpose. One significant attribute of term insurance is convertibility, which allows the policyholder to convert their term policy into a permanent life insurance policy without undergoing a new medical examination. This feature is beneficial for policyholders who may want lifelong coverage later or if their health changes.

Another critical feature is renewability. Many term policies come with the option to renew the coverage at the end of the term without having to provide evidence of insurability. This means that even if the insured’s health has declined, they can continue their coverage, though usually at a higher premium due to increased age or new health conditions.

In contrast, the options emphasizing cash values and dividends are typically associated with permanent life insurance policies rather than term insurance. Cash values are accumulated savings components seen in whole life insurance, while dividends are usually relevant to participating whole life policies. Therefore, the inclusion of convertibility and renewability accurately reflects two foundational aspects of term insurance.