SYDNEY, July 15 (Reuters) - China's Ping An insurance is looking to raise $3.5 billion in a convertible bond deal, according to a term sheet seen by Reuters on Monday.

The bond will have a coupon of 0.375% to 0.875% per annum, paid semi-annually, according to the term sheet.

There is a conversion premium between 25% and 30% above Ping An's Hong Kong listed share price, the term sheet said.

Ping An intends to use the money raised to strengthen its capital position and fund growth in health care and the aged care sector, the company said in a Hong Kong Stock Exchange filing.

Ping An is also running a concurrent so-called delta placement that will give investors buying the bond a hedging facility.

Final pricing on the deal is expected later Monday.

Convertible bonds have become increasingly popular with Chinese companies looking to raise funds through equity linked products in the past few months. Alibaba Group raised $5 billion in a convertible bond in May.

JPMorgan and Morgan Stanley are leading the Ping An deal.

(Reporting by Scott Murdoch, Editing by Louise Heavens)