Certified Financial Consultant (CFC) Practice Exam

How can an employee who has group life insurance obtain an individual policy after leaving the company?

1. By applying with proof of insurability

2. By converting her group policy within 31 days

3. By purchasing a new policy immediately

4. By completing a medical examination

The correct answer is: By converting her group policy within 31 days

When an employee leaves a company that provides group life insurance, they often have the option to convert their group policy into an individual one. This conversion process typically allows the individual to continue life insurance coverage without needing to undergo medical underwriting or provide evidence of insurability. This is particularly beneficial as it grants access to coverage even in cases where the individual might have developed health issues since the original enrollment. The requirement to complete this conversion usually falls within a specific period following termination, such as 31 days, which ensures that the individual has a seamless transition to their new policy without a gap in coverage. This feature is common in many group life insurance plans, reflecting the understanding that employees may find themselves in need of continuation of coverage shortly after leaving their job. In contrast, applying with proof of insurability or completing a medical examination would typically be formalities associated with obtaining a new policy or reinstating existing coverage rather than converting a group policy. Furthermore, while purchasing a new policy immediately is an option in some circumstances, it may not guarantee the same level of coverage or favorable terms as maintaining the converted group policy.