EX Patrick was born on June 1, 1960. He bought a $500,000 5-year
renewable and convertible term insurance policy on September 15, 2005,
when his attained age was 45. The policy permits conversions at any time up
to age 65.
Patrick renewed the policy in 2010, and he decided to convert the policy on
May 10, 2014.
If this is an original-age conversion, his permanent life insurance premiums will be based on age 45.
If this is an attained-age
conversion, his permanent life insurance premiums will be based on age 54,
because his attained age on May 10, 2014, is based on his nearest birthday,
which would be June 1, 2014
Original-age conversions would result in lower premiums for the permanent life insurance, which
would appear to be advantageous. However, the initial premiums for an original-age convertible
term policy will be higher than the premiums for an attained-age convertible term policy. This is
because the insurance company is taking on the risk of providing lifetime coverage at a lower rate
if the original-age conversion is exercised
in the case of an original-age conversion, the policyholder would have to pay the insurer a lump sum equal to catch up.this is why most insurers either do not offer original-age convertible