What does the term 'conversion privilege' mean in insurance?

The term 'conversion privilege' in insurance specifically refers to the ability of a policyholder to convert a group insurance policy into an individual insurance policy without the need for medical underwriting. This is particularly relevant in situations where an individual may no longer be eligible for group coverage, such as when they leave a job or when the group plan is terminated. By exercising their conversion privilege, policyholders can maintain their coverage and ensure that they are not left without protection due to health changes that might otherwise affect their ability to obtain similar individual coverage.

This concept is significant because it provides continuity of coverage and peace of mind for policyholders who may have health issues that complicate acquiring new insurance. Thus, the correct interpretation of 'conversion privilege' captures its essential function in protecting individuals' access to insurance, which is why this answer is accurate.