36. Which of the following is a characteristic of conversion from group to permanent life insurance?
Answer: C
Conversion must be applied for within thirty-one days of termination
To convert from group to permanent life insurance, the policyholder must apply for the conversion within thirty-one days of terminating their group coverage. This time frame is crucial to ensure the individual can secure the new policy without having to provide proof of insurability.
A) Proof of insurability is required
This option is incorrect because typically, when converting from a group policy to an individual permanent policy, proof of insurability is not required, provided the conversion is done within the specified time frame. This characteristic is designed to facilitate the transition for individuals who may have health issues.
B) Conversion must be to term insurance
This option is incorrect as the conversion does not have to be to term insurance; rather, it can be to a whole life or other types of permanent insurance. The purpose of conversion is to allow the individual to maintain coverage, not limit it to temporary insurance.
C) Conversion must be applied for within thirty-one days of termination
This option is correct as it accurately reflects the requirement that the policyholder must apply for conversion within thirty-one days of the termination of their group coverage. This ensures that individuals retain their insurability and can continue their life insurance protection without additional barriers.
D) Premium for the new policy will be based on the age when first covered by the group policy
This option is incorrect because premiums for the new permanent policy are typically based on the insured's age at the time of conversion, not when they were first covered under the group policy. This means that if there is a delay in conversion, the cost may be higher due to the individual's current age.
Conclusion
The correct answer is C, as it highlights the critical requirement to apply for conversion within thirty-one days, ensuring continuity of coverage. Options A, B, and D are incorrect due to their misrepresentation of the rules governing conversion from group to permanent life insurance, which are designed to protect the insured's interests and facilitate the transition process.