Which statement regarding the ability to switch between YRT and LCOI is correct?

Switching from Yearly Renewable Term (YRT) to Level Cost of Insurance (LCOI) is a feature often offered in certain life insurance policies. YRT typically provides coverage that renews each year, with premiums that can increase as the insured gets older, whereas LCOI involves a level premium structure over the life of the policy, offering more predictability in costs.

The first option is correct because it reflects the common practice within the insurance industry. Policyholders can usually convert from YRT to LCOI to stabilize their premiums as they age, but switching back from LCOI to YRT is often restricted or more complicated due to the differing nature of these products. LCOI is designed to provide level premiums, and reversing the conversion may not reflect the original underwriting or health assessments.

Understanding the limitations of switching between these types of policies helps in planning for long-term insurance needs and ensuring that clients are aware of their options as their circumstances change. The other options do not accurately depict the typical rules governing these switches, highlighting the importance of recognizing the specific features and restrictions that apply to policy conversions.