Question

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a?

a) Whole life insurance policy
b) Universal life insurance policy
c) Variable life insurance policy
d) Term life insurance policy

Answer 1

Upon being fired, an employee with group term life coverage can usually convert this into a Whole life or Universal life insurance policy, which are types of permanent life insurance with a cash value component. Term policies are generally not available for conversion as they do not build cash value.

Step-by-step explanation:

An employee with $25,000 group term life coverage who was recently fired can generally convert this group coverage to an individual life insurance policy without having to provide evidence of insurability. The types of policies available for conversion depend on the terms of the group life insurance plan.

Typical options include converting to a Whole life insurance policy or a Universal life insurance policy. Both of these types of insurance are permanent life insurance policies with a cash value component. Term life insurance policies are generally not an option for conversion from group term plans as they do not build cash value. A Variable life insurance policy, which offers investment features, is less commonly available for conversion.