Colorado Life Producer License Practice Test

What can an insured convert to after terminating coverage in a group policy?

1. Term life insurance

2. Whole life insurance without proof of insurability

3. Universal life insurance

4. Variable life insurance

The correct answer is: Whole life insurance without proof of insurability

When an insured terminates coverage in a group policy, they usually have the option to convert their policy to an individual whole life insurance policy without the need for proof of insurability. This means that the individual can secure coverage without having to undergo any medical examinations or provide health information that might otherwise affect their ability to obtain insurance. Whole life insurance is typically chosen for conversion because it offers permanent coverage and builds cash value over time. The ability to convert to a whole life policy safeguards against potential health issues that could arise later, which might make obtaining coverage more difficult or expensive if the individual were to apply for a new policy entirely. While term, universal, and variable life insurance policies are also types of individual insurance, the standard conversion provisions in many group policies specifically reference whole life insurance, making it the most straightforward and guaranteed option for the insured at the time of conversion.