Question 39

The new policy is issued without requiring evidence of insurability.

When an insured under a group life insurance plan in Utah elects the conversion option, they are able to secure a new policy without the necessity to provide evidence of insurability, ensuring that they can maintain coverage regardless of their current health status.

A) without requiring evidence of insurability

This option is correct because the conversion privilege in group life insurance allows individuals to obtain a new policy without having to undergo medical underwriting. This provision is designed to protect individuals who may have developed health issues since the original coverage was issued.

B) at the same premium rate as the group coverage rate

This option is incorrect. The premium rate for the new individual policy is typically based on the individual's age and health status at the time of conversion, which may differ from the group rate. Thus, it does not guarantee that the new premium will match the group coverage rate.

C) with a maximum face amount of two × the group benefit amount

This option is also incorrect. While policies may have limits, the conversion does not universally stipulate that the new policy will have a maximum face amount of two times the group benefit amount. The actual limits can vary depending on the specific terms of the group policy and state regulations.

D) as temporary coverage until the insured becomes eligible under a new group plan

This option is incorrect. The conversion option provides an individual with a permanent policy rather than temporary coverage. The insured is not required to wait for eligibility under another group plan to maintain their life insurance coverage.

Conclusion

The correct answer, that the new policy is issued without requiring evidence of insurability, is fundamental to the conversion option in group life insurance. This allows for continuity of coverage, which is essential for individuals who may face challenges in obtaining insurance due to health changes. Other options fail because they misrepresent the nature of the conversion process and its implications for coverage and premiums.