Massachusetts Life Producer Practice Exam

Which type of policy can group term life insurance normally be converted to?

1. A term life insurance policy

2. An individual permanent life insurance policy

3. A group whole life insurance policy

4. A universal life insurance policy

The correct answer is: An individual permanent life insurance policy

Group term life insurance is designed to provide coverage for a specific period and is often provided through an employer or organization. One of the key features of group term life insurance is the option for insured individuals to convert their coverage into an individual policy when they leave the group plan, such as when employment ends or when they reach a specific age. This conversion typically allows the individual to convert their group term coverage into an individual permanent life insurance policy. Permanent policies, unlike term policies, offer lifetime coverage and can build cash value over time. The right to convert is significant because it provides a way for individuals to maintain life insurance coverage without the need for a medical examination, thus ensuring they are not left without coverage due to changes in health status. The other types mentioned, such as term life insurance, group whole life insurance, and universal life insurance, do not align with the standard conversion process associated with group term insurance. The conversion is specifically aimed at transitioning to an individual permanent policy to ensure continued financial protection.