South Carolina Life Insurance Practice Exam

What does converting a group life policy to an individual policy typically allow an insured to do?

1. Maintain the same coverage amount without adjustment

2. Lower premiums than the group plan

3. Switch to a different provider without penalty

4. Choose between term or permanent individual coverage

The correct answer is: Choose between term or permanent individual coverage

Converting a group life policy to an individual policy typically allows the insured the flexibility to choose between different types of coverage, such as term or permanent insurance. This option is beneficial because it enables individuals to select a policy that best fits their personal financial goals and needs, which may differ from the original group plan. Group life insurance often provides a basic level of coverage that may not fully align with an individual's future needs or preferences. By converting to an individual policy, the insured can tailor their coverage according to their circumstances, whether that means opting for a term policy for lower premiums over a specific duration or a permanent policy that builds cash value over time. The ability to make this choice reflects the individualized nature of personal insurance compared to group plans, which are designed to provide uniform coverage for a broad audience.