New York Insurance Exam Practice Question
What is the purpose of a policy's conversion privilege?
Correct Answer: B
Rationale: The purpose of a policy's conversion privilege is to allow the policyholder to convert a term policy into a permanent policy without undergoing additional underwriting. This flexibility ensures continued coverage as circumstances change.
Option A, changing the premium amount, is not the primary function of the conversion privilege, as premiums are determined by the type of policy and the insured's age at conversion.
Option C, waiving the death benefit, misrepresents the privilege's intent, as it focuses on maintaining coverage rather than eliminating benefits.
Option D, canceling the policy, is unrelated to conversion privileges, which are designed to enhance coverage options rather than terminate them.
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