Tennessee Insurance Practice Exam

An employee with $25,000 group term life coverage was recently fired. What can this employee convert their coverage into?

1. $25,000 individual whole life policy

2. $25,000 term life policy

3. $50,000 universal life policy

4. Group health insurance policy

The correct answer is: $25,000 individual whole life policy

The correct answer for this scenario is that the employee can convert their group term life coverage into a $25,000 individual whole life policy. When an employee receives group term life insurance coverage, they typically have a provision that allows them to convert that coverage to an individual policy upon leaving the group or employer, usually without requiring a medical exam. This is designed to help former employees maintain a form of life insurance after they lose their group benefits. In this case, since the employee had $25,000 in group term life coverage, they can opt for an individual whole life policy for the same amount. Whole life policies provide coverage for the lifetime of the insured and also include a cash value component that can grow over time, offering long-term benefits and stability. The other options do not align with the typical conversion benefits available under group term life insurance policies. For example, converting to a term life policy would not necessarily meet the criteria provided for this scenario, and universal life policies, while flexible, are different products that are usually not directly convertible in this manner. A group health insurance policy doesn't relate at all to life insurance and would not be relevant in this context. Thus, the best and most applicable option is indeed the conversion to a whole life policy