West Virginia State Life Insurance Practice Exam

If an employee with $25,000 group term life coverage is fired, what can this employee do with the coverage?

1. Convert it to an individual whole life policy for $25,000

2. Transfer it to the spouse automatically

3. Continue the group coverage under COBRA

4. Switch it to a term policy with a reduced face value

The correct answer is: Convert it to an individual whole life policy for $25,000

The correct choice reflects the typical provision known as the conversion privilege, which often allows employees who leave their jobs (for reasons such as being fired) to convert their group term life policy into an individual whole life policy without having to provide evidence of insurability. This is particularly important, as individuals may face difficulty obtaining life insurance coverage after losing their job due to health issues or other factors. In this scenario, since the employee is entitled to maintain some level of coverage after leaving the group plan, they can opt for conversion. The employee will usually have a specified period, often 31 days, to make the conversion to an individual policy, typically for the same amount of coverage. This means that the employee would be able to secure life insurance coverage even after their group coverage has ceased, providing financial protection for their loved ones. The other options do not align with the standard practices associated with group term life insurance. For instance, transferring coverage to a spouse automatically does not generally occur, as insurance policies are personal to the insured individual. Continued group coverage under COBRA is applicable for certain types of benefits but isn't designed for group life insurance, which often does not have a COBRA equivalent. Similarly, switching to a term policy with a reduced face value isn't