An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
A. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
B. She will still be covered under the group plan, but will have to pay an individual policy premium.
C. She must apply for a new policy, which requires her to provide proof of insurability.
D. She can only convert her coverage without proof of insurability if she has the master policy.
The correct answer and explanation is:
The correct answer is A. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
When an employee leaves a company that provides group life insurance, she may have the option to convert her group policy into an individual policy, typically without the need for proof of insurability. This means she will not be required to provide evidence of good health or undergo a medical examination to qualify for the new individual policy. However, this conversion must occur within a specified period, usually 31 days after the termination of her employment or loss of group coverage.
This option is designed to ensure that employees who lose group insurance due to leaving a job are not left without coverage, especially if they have health issues that might make it difficult for them to obtain a new policy on their own. The employee can contact the insurance provider and request the conversion within the 31-day window. The individual policy may have different terms, including higher premiums, since group life insurance often benefits from collective purchasing power, which reduces the cost compared to individual policies.
Option B is incorrect because, upon leaving the group plan, the employee will not continue to be covered under the same group policy. She must either convert to an individual policy or apply for a new one.
Option C is also incorrect because, while applying for a new individual policy may require proof of insurability, the conversion option available within 31 days does not require such proof.
Option D is incorrect because having the master policy does not grant the right to convert without proof of insurability; the conversion right applies based on the individual’s status and timeframe, not the master policy.