52. Which of the following is TRUE concerning the conversion of group life insurance coverage to an individual policy?
Answer: C
An insurer cannot require evidence of insurability before issuing a conversion policy
When converting group life insurance coverage to an individual policy, the insurer is not permitted to require evidence of insurability, ensuring that the insured can maintain coverage without additional health assessments.
A) It applies whenever life insurance coverage terminates
This option is incorrect because the conversion privilege specifically applies to certain circumstances, such as the termination of group coverage, but not to all instances of life insurance termination. There are specific conditions under which conversion is allowed.
B) The insured receives a paid-up conversion policy upon termination of employment unless he or she informs the insurer otherwise
This statement is incorrect. While conversion to an individual policy is available, it does not automatically mean the policy is paid-up. The insured must typically pay premiums to maintain the policy, and the conversion may not be automatic without proper action from the insured.
C) An insurer cannot require evidence of insurability before issuing a conversion policy
This option is correct, as it accurately reflects that insurers must provide a conversion policy without requiring the insured to prove their insurability. This provision protects individuals who may not qualify for coverage due to health issues.
D) The premiums under the conversion policy will be the same
This statement is incorrect because the premiums for a conversion policy are typically higher than those of group insurance rates. The conversion policy is based on individual risk factors and not the group rate, often resulting in increased costs for the insured.
Conclusion
The correct answer is C, as it clearly states the insurer's obligation not to require evidence of insurability when issuing a conversion policy. Options A, B, and D fail to accurately represent the terms and conditions surrounding the conversion process, making C the only true statement regarding the conversion of group life insurance coverage.