Under which circumstance can a group life insurance policy be converted to an individual policy

1. Some states have laws that require employers to notify terminated employees of their right to convert group life insurance benefits to a direct pay individual life insurance policy.
2. The limited opportunity to convert life insurance, which is generally a short 31-day window following the date group coverage ends, allows employees to continue their life insurance without medical underwriting.
3. The conversion privilege is especially important when employees have medical conditions that would make it difficult for them to secure coverage on their own elsewhere.
4. In many circumstances providing a life insurance booklet or ERISA Summary Plan Description that contains specifics on this provision is acceptable notification.
5. Review your group life insurance policy. Ensure you understandthe insurer’s procedures and the employer’s responsibilities for eligibility, conversion and any other continuation features, such as portability.

Who needs to convert their Life Insurance Policy?

This is not a common thing that occurs when dealing with Life Insurance. This situation will usually occur when someone is attempting to change from a company’s group insurance policy over to an individual life insurance policy. The reason for the switch can generally be chalked up to one of the following reasons, if it is from a company:

• Employee retires or is put on disability and is no longer eligible
• Employee has been fired from place of employment
• Employee quits, and moves on to a different company

These are just a few reasons as to why a mandatory life insurance switch from group to individual would be necessary. Most policies would have a certain grace period after the insured has been fired, so the immediate effects of a contract not being transferred might not be warranted.

Almost all company life insurance policies have a grace period of thirty-one days after the day of release from the company to get the life insurance policy swapped over to an individual policy.

This period can come under question if the insured passes away within this time frame, and as such, it is important to get the exact date and time of the release from the job, as that will help to exonerate the insured of being denied.

These are just a few reasons as to why you may be denied the claim of the life insurance.

As such, always talk to an experienced life insurance specialist to help maximize your chances of getting the most out of your case.

Whats is a Convertible Term Life Insurance

Even though it’s not as popular, there is also an investment component to term life insurance – as long as it is convertible to a permanent product.

This feature of convertibility is a rider that is often built into a term life insurance policy, but sometimes is an option that the owner pays extra for.

When you pay the yearly premium on a convertible term life insurance policy, you get a couple of things: the right to get a death benefit if the insured person dies, and chance to buy a permanent life insurance policy at good rates that are based on the good health of the insured when the term policy was taken out, regardless of any changes in health that may have occurred since that time.

This could have a very significant value in terms of paying lower premiums in the event that the health of the insured declines significantly.

There is also a possibility that an insured person’s health has declined so significantly that they no longer would qualify to buy a life insurance policy.

If a term policy is convertible to permanent coverage the life insurance company must extend permanent coverage to the insured person, even if they would not issue them a new policy otherwise.

Sears Employees Life Insurance Conversion

When Sears Group Life Insurance coverage for their employees terminates, you can convert all or part of your life insurance coverage with no medical exam required.  Your premiums will change because you no longer will receive a Sears contribution toward your premium and because you are no longer part of an insurance pool with other enrollees.

Mintco Financial Life Insurance Independent Specialists in Life Insurance Policy Conversions

Life Insurance Conversion Specialists: Group Life Insurance to Individual Life Insurance

Contact us today to review your options!

Call us at 813-964-7100 or 716-565-1300

Email us

www.MintcoFinancial.com

Problem

Generally speaking, employers are not familiar with the responsibility and potential liability for failing to notify employees of their right to convert group life insurance coverage to an individual life insurance policy upon termination of employment, or their right to apply for a waiver of premiums if they are disabled and absent from work. Within the past few years, there has been a wave of litigation brought by former employees and their beneficiaries complaining about the loss of group life insurance coverage due to misrepresentations made by employers about their group coverage and the failure of employers to inform terminated employees about their rights under the group life insurance plan documents.

How does an employer minimize its risks and ensure that its former employees know about their rights to convert group life insurance coverage to an individual policy or apply for a waiver of premiums in certain circumstances?

Solution

Most group life insurance policies contain a portability provision (also known as a right of conversion provision), which allows employees to convert their group life insurance coverage to an individual policy upon termination of employment. Similarly, most group life insurance policies also contain a waiver of premium provision if an employee ceases working due to a disability. If the application for waiver of premium is approved, the employee could maintain the group life insurance coverage without payment of premiums while out of work due to a disability.

An employer can minimize the risk of potential litigation by sending a notice to employees upon termination of their employment, stating that if the employee had group life insurance coverage, then the employee may be eligible for conversion of that coverage to an individual policy. The notice should direct the former employee to contact the insurance company as soon as possible as their may be a deadline to convert the coverage.

If an employee is provided a leave of absence due to a disability, or an employee is terminated due to a disability, a separate notice should be provided to the employee that she may be eligible for a waiver of premiums of the life insurance coverage. The notice should direct the employee to contact the insurance company as soon as possible, as there may be a deadline to submit the application for waiver of life insurance premiums.

Practical Insights is published solely for the interest of Ford & Harrison LLP's clients and friends and should not in any way be relied on as legal advice. For specific information on particular facts situations, legal counsel's opinion should be sought. For further information on this Practical Insights, contact Tiffany Downs at 404-888-3961 (), or another member of the firm's Employee Benefits and Executive Compensation Group. These materials may be considered ATTORNEY ADVERTISING in some states.

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