Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceEasy
An employee is covered under a $50,000 group life insurance policy provided by their employer. The employee's spouse is the designated beneficiary. If the employee terminates employment, what option allows them to continue their coverage without providing proof of insurability?
- AReduced Paid-Up
- BReinstatement
- CConversion
- DExtended Term
Show answer & explanationAnswer & explanation
Correct answer: C. Conversion
The conversion privilege in group life insurance allows an employee to convert their group coverage to an individual policy (usually whole life) within a specific timeframe after leaving the group, without needing to provide evidence of insurability.
Why the other options are wrong
- A. Reduced Paid-Up is a nonforfeiture option for individual whole life policies, not group policies.
- B. Reinstatement applies to lapsed individual policies, not group policies upon termination of employment.
- D. Extended Term is a nonforfeiture option for individual whole life policies, not group policies.
Group Life Conversion Privilege
A provision in group life insurance that allows an employee to convert their group coverage to an individual policy upon termination of employment, without proof of insurability.
- Available when employment terminates or group coverage ends.
- Must be exercised within a specified period (e.g., 31 days).
- Usually converts to a whole life policy.
- New policy's premium is based on the insured's attained age.
Memory trick: When the group door closes, you can convert to individual.