What do convertible policies allow the owner to do?

Convertible policies are designed to provide flexibility for policyholders regarding their life insurance coverage. Specifically, these policies allow the owner to convert a term insurance policy into a permanent cash value policy before the term expires. This feature is particularly valuable because it offers individuals the opportunity to secure lifelong coverage and begin building cash value within the policy as their needs evolve or as their financial situation changes.

The conversion typically does not require evidence of insurability, meaning the policyholder can make the switch regardless of any changes in health that may have occurred since obtaining the term policy. This aspect makes convertible policies an attractive option for those who wish to maintain their life insurance coverage long-term without undergoing a new underwriting process.

In contrast, the other options do not accurately represent the function of convertible policies. For instance, converting a cash value policy to a term policy wouldn't align with the purpose of a convertible policy, and changing beneficiaries or increasing the death benefit amount does not inherently relate to the conversion feature. Therefore, the ability to convert a term policy to a cash value policy is the defining characteristic of convertible policies, making it the correct answer.