What Is a Life Insurance Conversion Privilege?

A life insurance conversion privilege is a clause in a life insurance contract that makes it easier for individuals to qualify for individual life insurance after leaving a group life insurance plan. This is a commonly used clause when an individual leaves a job for self-employment or to pursue another job.

With this provision, an employee can convert her group life insurance policy into an individual life insurance policy with minimal hassle. She will not have to go through another approval process or a medical exam to determine insurability. The life insurance company will extend coverage to her based on the fact that she was already approved as part of the group life insurance plan. 

In some cases, the individual can continue to receive a group discount even though she is no longer part of the group. In order to qualify for this provision, you have to notify the life insurance company within 31 days of termination of employment with the group policyholder. If you wait until after 31 days, you will have to go through a new approval process in order to get an individual life insurance policy. This might entail a new medical exam even if you work with the same company.

blog comments powered by Disqus