Retroactive Conversion
What Does Retroactive Conversion Mean?
Retroactive conversion occurs when a life insurance policy is converted to its cash value. In this case, rather than the cash value starting to accumulate on the conversion date, it is calculated from the original date the policy was issued, resulting in a significantly higher cash value than would typically be expected.
Insuranceopedia Explains Retroactive Conversion
Retroactive conversion can be an appealing option for individuals who initially opt for term life insurance but later wish to switch to a cash value policy. This feature adds flexibility to term life insurance and provides an additional incentive for people to purchase coverage. A significant amount of cash value can accumulate if the term policy remains in effect for several years before being converted to a cash value policy.
