6.4.3 Conversion Privileges
According to Florida law, all group life policies must contain a conversion provision which allows the covered individual 31 days to convert the group coverage to an individual plan without evidence of insurability if their employment is terminated. If the insured dies before the end of the conversion period or before converting the policy, benefits are still payable; the beneficiary retains rights to the death benefit. If the employee did not exercise the conversion privilege and died on the 32nd day, policy benefits would be void. However, if he died on the 31st day or prior, benefits would be payable.
Most group conversion provisions require the individual to convert to a whole life policy rather than term. If the employer allows, ex-employees can actually take their existing coverage with them as a term policy rather than a whole life policy. Those employees who opt for this method are placed in a separate group which allows pooling to keep costs down. The premium for the new policy is based on the individual's attained age at the time of conversion.
All group life insurance policies must be convertible.
The conversion period is 31 days.
Any death within the conversion period is covered.
Industrial life policies that total $3,000 or more in face value can be converted into an ordinary life policy without evidence of insurability.*
*See page 417, Florida study manual, "What is the rule for conversion (change of plan)?"
What conversion rights belong to a surviving spouse of a group life insurance certificate holder?
1 |
Section 6.4 ReviewGroup life insurance programs consist of which two basic types of insurance plans? |
2 |
Group term life insurance is the most expensive group life coverage. |
3 |
Under a Group Ordinary plan, the cash value can be retained by the employer. |
4 |
Under a Group Paid-up plan at retirement or termination, the employee is entitled to the cash value. |
5 |
Group life policies must contain a conversion provision which allows the covered individual ___________ to convert the group coverage to an individual plan without evidence of insurability if their employment is terminated. |
