Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceMedium
An employee is covered under a $100,000 group life insurance policy provided by their employer. If the employee terminates employment, they have the right to convert their group coverage to an individual policy without evidence of insurability. What is the maximum face amount the employee can convert?
- A$100,000
- B$50,000
- CThe amount is determined by the new individual policy's underwriting.
- D$25,000
Show answer & explanationAnswer & explanation
Correct answer: A. $100,000
Under the group life conversion privilege, an employee who terminates employment generally has the right to convert their group term life insurance coverage to an individual permanent policy (usually whole life) for the *same face amount* as their group coverage, without needing to provide evidence of insurability. The premium for the individual policy will be based on their attained age.
Why the other options are wrong
- B. Some group plans may have lower conversion limits, but the standard and most common right is to convert the full amount.
- C. The conversion right bypasses individual policy underwriting; evidence of insurability is NOT required for the converted amount.
- D. This is an arbitrary amount and not the standard conversion limit.
Group Life Conversion Privilege
A provision in group life insurance that allows an employee to convert their group coverage to an individual permanent life insurance policy, without evidence of insurability, upon termination of employment.
- Available upon termination of employment (or group policy termination)
- Must be exercised within a specific timeframe (e.g., 31 days)
- No evidence of insurability required
- Converted to an individual permanent policy (usually Whole Life)
- Can convert up to the full amount of group coverage
Memory trick: Leaving the group? Convert the full amount, no questions asked.