Question 21

Conversion allows an employee to change from group coverage to an individual life insurance policy.

Conversion is the policy provision that enables an employee to convert their group life insurance coverage into an individual policy without having to provide evidence of insurability.

A) Nonforfeiture

Nonforfeiture provisions refer to the rights that policyholders have to their benefits, even if they stop paying premiums. This option does not relate to the ability to change from group coverage to an individual policy, as it focuses more on preserving benefits rather than transitioning types of coverage.

B) Conversion

Conversion is the correct choice, as it specifically provides the mechanism through which an employee can switch from group life insurance to an individual policy. This option is designed to ensure that individuals do not lose their coverage when they leave a group plan, allowing them to maintain insurance on their own terms.

C) Assignment

Assignment refers to the legal transfer of rights under a policy from one party to another. This option does not apply to changing from group coverage to an individual policy, as it deals with the transfer of ownership rather than converting coverage types.

D) Incontestability

Incontestability clauses protect the policyholder from having their policy contested after a certain period, usually due to misrepresentation. This provision does not facilitate the change from group to individual coverage, as it pertains to the validity and enforcement of an existing policy rather than the process of conversion.

Conclusion

The conversion provision is essential for employees who wish to retain their life insurance coverage independently after leaving a group plan. Options A, C, and D do not address changing policies, making them insufficient in this context. Therefore, conversion is definitively the correct answer, as it directly relates to the transition from group to individual coverage.