Difficulty: Hard

Average Score: 47%

Which of the following statements is CORRECT about conversion of group Term Life insurance on termination of employment?

Rationale

If death occurs during the conversion period, the death benefit must be paid.

This statement accurately reflects the provisions often included in group term life insurance policies, which ensure that coverage remains in effect during the conversion period, allowing beneficiaries to receive the death benefit if the insured passes away.

A (Evidence of insurability is required.) YOUR ANSWER

Typically, evidence of insurability is not required for the conversion of group term life insurance to an individual policy. This option is often provided to allow employees to convert their coverage without the need for medical underwriting, thus simplifying the process for those who may have health issues.

B (Premiums on a new policy must be paid within a maximum of ten days.) YOUR ANSWER

While there may be a requirement to pay premiums for the new policy, the timeline is often longer than ten days. Generally, the insured is granted a specified period (often 30 days) to pay the first premium after conversion, which allows them more flexibility to secure their new policy.

D (A terminated employee may convert an amount of coverage up to five × the group coverage.) YOUR ANSWER

This statement is misleading as it implies a maximum conversion amount that is typically not specified in such terms. Generally, the amount a terminated employee can convert is limited to the amount of coverage they had under the group policy, not an inflated multiple of it.

Conclusion

In summary, the conversion of group term life insurance allows a terminated employee to maintain coverage by converting their policy, and importantly, if death occurs during this conversion period, the death benefit is guaranteed to be paid. Other statements regarding evidence of insurability, premium payment timelines, and conversion limits misrepresent the standard provisions associated with such policies, emphasizing the need for accurate understanding of insurance terms.

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