What risk does Carole face when applying for a convertible term assurance?

• A. Her premium will increase
• B. The life company might not offer guaranteed whole life at conversion
• C. She may be in poor health at conversion
• D. A refusal to allow the conversion option if engaging in hazardous activities

Answer: (B)

When considering the question of what risk Carole faces when applying for a convertible term assurance, the option mentioning that the life company might not offer guaranteed whole life at conversion highlights a significant aspect of convertible term policies.

Typically, convertible term assurance allows the policyholder to convert their term policy into a permanent life insurance product, such as whole life, without having to undergo additional medical underwriting at the time of conversion. However, the risk lies in the fact that the terms of conversion can vary by insurer, and there may be circumstances where the insurer does not guarantee the offer of whole life coverage at the time of conversion. This could be due to changes in the policy's terms, regulatory issues, or even the financial health of the insurance company.

If Carole does not have a clear understanding of the terms surrounding her conversion rights, she could find herself in a situation where she may not be able to convert to a guaranteed whole life policy when she needs to, especially if her personal circumstances change in the future.

Other options, while they can present challenges or concerns, do not encapsulate the specific contractual risk associated with the conversion process as this option does. For example, premium increases can occur due to age or re-assessment of risks over time,