South Carolina Life Insurance Practice Exam

If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?

1. Term Life

2. Whole Life

3. Limited-pay Whole Life

4. Universal Life

The correct answer is: Limited-pay Whole Life

When an insured terminates their membership in group life insurance, they typically have the option to convert their coverage to an individual policy without having to provide evidence of insurability. The most common and most applicable individual policy that people convert to in this scenario is a whole life policy. Whole life insurance provides permanent coverage for the insured's entire life, as long as premiums are paid. It also accumulates cash value over time, making it an appealing option for conversion. While term life, limited-pay whole life, and universal life insurance are alternatives, limited-pay whole life is a specific type of whole life insurance where premiums are paid for a limited time, after which the policy remains in force without additional premiums. This is a popular choice for conversion because it aligns closely with the features of group life policies. In summary, converting to limited-pay whole life allows the insured to maintain similar benefits and security offered by their previous group life insurance while taking advantage of the lifelong coverage and cash value accumulation that is characteristic of whole life policies.