AD Banker Comprehensive Practice Exam

What is required for an employee to convert their group policy to permanent insurance upon leaving employment?

1. Proof of insurability

2. Payment of outstanding premiums

3. Continuous coverage without changes

4. Completion of a health assessment

The correct answer is: Proof of insurability

To convert a group policy to permanent insurance upon leaving employment, most group insurance plans typically require the insured to provide proof of insurability. This means that the employee must demonstrate that they are in good health and able to be insured under a permanent life insurance policy. The rationale behind this requirement is that, unlike group life insurance—which often does not require medical underwriting—permanent life insurance policies do usually require an assessment of the individual’s health status. If significant health changes have occurred after the group policy was initiated, the insurance company needs to evaluate this new risk to determine insurability. In contexts where employees might find themselves wanting to secure coverage after termination, understanding the proof of insurability is crucial; it ensures that individuals are aware of their health status and its impact on future insurance opportunities.