Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

6 Convertible or renewable term assurance 6.1 Definition A renewable term assurance is a term assurance with the option to renew ie take out a further term assurance at the end of the original contract. The appeal of this option lies in the fact that the renewal can be made without further medical underwriting. Although in South Africa, renewable contracts sometimes allow for a test to detect for HIV at renewal. A convertible term assurance allows the policyholder to convert the term assurance into another type of contract, such as a whole life or endowment assurance. The points at which conversion is allowed will vary depending on the particular policy conditions. Conversion may be allowed on only one date, on any of several dates, or at any time during the original term assurance contract. A particular contract may offer only the renewal option, only the conversion option, or both. 6.2 Use to meet customers needs For individuals, these contracts combine the attractions of a term assurance, in terms of obtaining cheap death cover, with the certainty of being able either to convert to a permanent form of contract, ie an endowment or whole life assurance, when it can be afforded, or to renew the original contract for a further period of years, all without health evidence being provided unless the benefit level is increased. The Core Reading comment when it can be afforded reflects the fact that for a given sum assured the premiums for an endowment or whole life contract will be considerably more than for a term assurance. 6.3 Existence of a group version A comparable group arrangement would be the option for an individual in a scheme covered by a group life policy to convert to some form of individual arrangement on leaving the scheme. For example, an individual who has been a member of a group term assurance scheme during employment may, at retirement, be given a continuation option to continue the policy as an individual term assurance arrangement. If the individual takes up this option then the individual pays the future premiums.