What distinguishes a converted permanent insurance policy from a brand new permanent insurance policy in terms of the exclusion period?

A converted permanent insurance policy is typically derived from a term life policy and allows the policyholder to transition to a permanent insurance option without undergoing a new round of underwriting. When comparing it to a brand new permanent insurance policy, one key distinction lies in the exclusion periods associated with the policies.

When a new permanent policy is issued, it starts with its own fresh exclusion periods. This means that any contests or claims might be scrutinized based on the details provided during the application process, as the insurance company essentially begins its evaluation anew. On the other hand, a converted policy may carry over some of the benefits from the original term policy, such as the absence of a new contestability period for claims related to conditions that were disclosed during the term policy's application.

This understanding shows that the exclusion periods differ significantly, which is crucial for policyholders who are considering their options for coverage. The new policy's fresh start can be beneficial in some contexts while the converted policy retains some of the original terms, thus impacting how exclusions and contestability are applied.