A retired 75-year-old male with a $1 million term policy could not afford to convert the policy that was nearing the end of its guaranteed premium and conversion periods
. His health was fairly good for his age, but he was a cancer survivor and had a life expectancy of about 12 years.
* Shortened conversion periods. Policies with five-, 10-, and 15-year durations have five-year conversion periods; 20- and 30-year durations have 10-year conversion periods during which the insured may convert the coverage into permanent life insurance without requiring additional underwriting or evidence of insurability;
* For an additional premium, an extended conversion agreement allows the insured to extend the conversion period for the full duration of the policy or to age 75, whichever is earlier.
* Shortened conversion periods
. Five, 10, and 15 year durations have five-year conversion periods
; 20- and 30-year durations have 10-year conversion periods
during which the insured may convert the coverage into permanent life insurance without requiring additional underwriting or evidence of insurability;
Our analysis so far had shown that working capital and the speed of cash conversion are influenced by: inventories, receivables and payables conversion periods. Table 4 presents the descriptive statistics concerning the length of these cycles in manufacturing industry enterprises.
The conducted analysis shows that in 2007, when we could generally observe shorter receivables conversion periods, 50% of sections had the period shorter than 57 days, while in 2002, in which the periods were on the whole longer, 50% of sections had the periods shorter than 65 days.
The data presented in Table 4 shows that payables conversion periods were shortened in 2005-2008 as compared to the period 2001-2004, although settling liabilities happened in the period of over 50 days.
The length of this cycle can be determined after calculating of cycles that constitute it, that is the inventory conversion cycle, receivables conversion period and payables conversion period.
The idea of closed cash conversion cycle consists in the operational cycle (the sum of inventories cycle and receivables cycle) being shorter than the payables conversion period (Golebiowski and Tlaczala, 2005).
The cash conversion cycle defined in this way is influenced by three factors: inventories conversion period, receivables conversion period and payables conversion period.
In the interpretation of the inventories conversion period, we do not give extreme values, as it is typical for particular sections.