West Virginia State Life Insurance Practice Exam

When an employee is terminated, which statement about a group term life conversion is TRUE?

1. Policy proceeds will not be paid until the conversion is complete

2. Policy proceeds will be paid if the employee dies during the conversion period

3. Conversion requires a medical exam

4. The insurance will automatically lapse

The correct answer is: Policy proceeds will be paid if the employee dies during the conversion period

When an employee is terminated, it is important to understand the implications of group term life insurance and the conversion process. The statement that policy proceeds will be paid if the employee dies during the conversion period is accurate. In life insurance, a conversion period often allows an employee who has lost group coverage due to termination to convert their group term life insurance to an individual permanent policy without undergoing a medical examination. This period is critical because it provides a safeguard for the employee. If the employee were to pass away during this conversion period, the beneficiaries would still be entitled to receive the policy benefits, even if the conversion process had not yet been finalized. This feature is designed to protect individuals from losing coverage during a vulnerable transition, ensuring that their loved ones are not left without financial support in case of an unexpected death. The context around the other options helps clarify why they do not apply in this scenario. The first statement regarding policy proceeds not being paid until conversion is complete suggests a misunderstanding of the policy terms during the transition; benefits are indeed secured for death occurring within this window. The requirement for a medical exam to convert is also inaccurate, as one of the key advantages of converting from group insurance is the waiver of such a requirement. Lastly, the notion that insurance