Tennessee Insurance Practice Exam

When an employee is terminated, which statement about a group term life conversion is true?

1. The policy will be paid if the employee dies during the conversion period

2. The conversion must be completed within one month

3. Conversion is not allowed under any circumstances

4. Coverage continues indefinitely without premiums

The correct answer is: The policy will be paid if the employee dies during the conversion period

When an employee is terminated, the ability to convert group term life insurance to an individual policy serves as a vital protection. The true statement regarding this situation is that the policy will indeed pay out if the employee dies during the conversion period. This provision is designed to ensure that the employee, while transitioning from group coverage to an individual policy, remains protected during the critical time immediately following their termination. This benefit is significant because it alleviates the concern of losing coverage just as one’s employment ends. The conversion period is generally a specific timeframe during which the employee can elect to convert their group life insurance to an individual plan without needing to provide evidence of insurability, which means they cannot be denied coverage based on their health status. In contrast, other options present misunderstandings about the conversion process. For instance, stating that the conversion must be completed within one month is misleading, as the actual time frame might differ based on the specific policy or state's regulations. The notion that conversion is not allowed under any circumstances contradicts the very essence of these benefits, as coverage is provided during the conversion process. Lastly, the idea that coverage continues indefinitely without premiums does not accurately reflect typical insurance practices. Premium payments are usually required to maintain individual coverage after conversion.