24. Which of the following is a characteristic of conversion from group to permanent life insurance?
Answer: D
Conversion must be applied for within 1 month of termination.
In the process of converting from group to permanent life insurance, it is essential that the application for conversion is submitted within one month following the termination of the group policy. This requirement ensures that individuals can maintain their coverage without the need for new underwriting.
A) Premium for the new policy will be based on the age when first covered by the group policy.
This statement is incorrect as the premium for the new permanent policy is based on the individual's age at the time of conversion, not when they were first covered by the group policy. This distinction is crucial since it affects the cost of the new policy.
B) Conversion must be to term insurance.
This option is incorrect because conversion from a group policy typically allows for a change to permanent insurance, not just term insurance. The flexibility to choose permanent coverage is a key aspect of the conversion process.
C) Proof of insurability is required.
This statement is false as one of the benefits of converting from a group policy is that individuals are generally not required to provide proof of insurability. This provision is designed to make it easier for individuals to maintain coverage after leaving a group plan.
D) Conversion must be applied for within 1 month of termination.
This statement is correct and highlights a critical aspect of the conversion process. Adhering to this time frame is necessary to ensure that individuals retain their insurance coverage without undergoing new underwriting requirements.
Conclusion
The correct answer, stating that conversion must be applied for within 1 month of termination, reflects an important time-sensitive requirement in the conversion process. Other options misrepresent the characteristics of conversion, whether regarding premium calculations, types of insurance available, or requirements for proof of insurability. Understanding these distinctions is vital for individuals transitioning from group to permanent life insurance.