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15.6 Life Insurance Policies

Group Life Insurance​

Conversion to an Individual Policy​

If coverage under a group life insurance plan ends due to termination of employment, the insured has the right to convert the coverage to an individual life insurance policy without providing evidence of insurability. The converted policy cannot include disability or supplemental benefits. To exercise the conversion privilege, the insured must apply for the individual policy and pay the initial premium within 31 days after the group coverage terminates. The amount of the individual policy cannot exceed the amount of coverage provided under the terminated group policy, reduced by any amount of life insurance for which the individual becomes eligible under the same or another group policy within that 31-day period.

The conversion privilege is available to the following individuals:

  • Any surviving dependent of the employee or member, for coverage under the group policy that terminates because of the employee’s or member’s death.
  • A dependent of an employee or member whose coverage terminates because the individual no longer qualifies as a dependent under the group policy, while the employee or member continues to be insured under the group policy.

If an individual is not notified of the right to convert to individual coverage at least 15 days before the end of the 31-day conversion period, the individual must be given an additional opportunity to exercise that right. This extended period continues for 15 days after notice is provided, but it may not extend beyond 60 days after the original conversion period expires. For purposes of this requirement, notice is considered properly given if it is provided in writing to the individual, mailed by the policyholder to the individual’s last known address, or mailed by the insurer to the individual’s last known address as provided by the policyholder.

If a group life insurance plan is terminated, each individual insured on the date of termination who has been covered under the plan for at least 5 years is entitled to convert the coverage to an individual policy within 31 days, without providing evidence of insurability. The amount of coverage available under the converted policy is limited to the lesser of $10,000 or the amount of coverage provided under the group policy.

Quiz​

1. When an employee’s group life insurance coverage terminates because employment ends, the employee may convert the coverage to an individual policy without:

A. Paying an initial premium

B. Providing evidence of insurability

C. Completing an application

D. Waiting 60 days

Correct Answer: B

Rationale: An insured whose group life coverage terminates due to termination of employment has the right to convert to an individual policy without providing evidence of insurability, provided the application and premium are submitted within 31 days.