Question

A terminated employee that has exercised the conversion privilege is able to convert A) only after providing evidence of insurability B) without paying for the premiums C) permanent insurance into term insurance D) term insurance into permanent insurance"

a) Only after providing evidence of insurability
b) Without paying for the premiums
c) Permanent insurance into term insurance
d) Term insurance into permanent insurance

Answer 1

Option (c), A terminated employee can convert term insurance into permanent insurance without providing evidence of insurability, but will be responsible for the premiums on the new policy.

Step-by-step explanation:

A terminated employee who has exercised the conversion privilege is able to convert term insurance into permanent insurance. This means that when an individual leaves an employer with whom they had a group term life insurance policy, they have the option to convert that policy into an individual permanent life insurance policy without providing evidence of insurability. This is a valuable benefit as it allows the individual to continue life insurance coverage despite any health issues that may normally prevent them from obtaining a new policy.

The conversion process does not allow for converting permanent insurance into term insurance, which is a less common scenario. The employee will still be responsible for paying the premiums on the new permanent life insurance policy, contrasting with option B, which incorrectly suggests that conversion can occur without paying premiums.