Question 40

If death occurs during the conversion period, the death benefit must be paid.

This statement accurately reflects the provisions typically associated with the conversion of group Term Life insurance. It ensures that even if a terminated employee passes away during the conversion period, their beneficiaries are entitled to receive the death benefit.

A) Evidence of insurability is required.

This statement is incorrect. In most cases, when converting group Term Life insurance to an individual policy, evidence of insurability is not required. The conversion is usually granted without the need for medical underwriting, allowing the employee to secure coverage despite their health status at the time of termination.

B) Premiums on a new policy must be paid within a maximum of ten days.

This statement is misleading. While there may be specific timeframes for when premiums are due after conversion, the requirement typically varies by policy and provider. Therefore, stating a definitive ten-day period is overly prescriptive and not universally applicable.

C) If death occurs during the conversion period, the death benefit must be paid.

This statement is correct as it aligns with standard practices in group Term Life insurance policies. The provision ensures that beneficiaries receive the death benefit even if the insured dies during the conversion period, highlighting the importance of coverage continuity after employment termination.

D) A terminated employee may convert an amount of coverage up to five × the group coverage.

This statement is incorrect. The amount of coverage that a terminated employee can convert is usually limited to the amount of group coverage they had while employed, often capped at the same amount rather than a multiple of it. Therefore, this option misrepresents the typical conversion rules.

Conclusion

The correct answer, which states that if death occurs during the conversion period, the death benefit must be paid, is supported by the fundamental principles governing group Term Life insurance. All other options fail to accurately reflect the provisions for conversion or misinterpret the relevant rules, making them incorrect in the context of this question.