PSI Ohio Insurance Practice Exam

What provision is typically included in Group Life Policies?

1. Conversion privilege

2. Dividend distribution

3. No-fault clause

4. Automatic renewability

The correct answer is: Conversion privilege

The inclusion of a conversion privilege in group life policies is a common practice designed to provide essential benefits to insured individuals when they leave their group plan, whether due to job loss, retirement, or change in employment. This provision allows members to convert their group life insurance coverage into an individual policy without needing to provide evidence of insurability, which simplifies the process for individuals who may otherwise struggle to obtain life insurance due to health issues. The conversion privilege typically stipulates that individuals must exercise this option within a specific timeframe after leaving the group plan, ensuring they can maintain their life insurance coverage without facing potential denial due to health conditions that may have developed while they were covered under the group policy. This element of protection provides peace of mind and is a significant aspect of why many opt for group life policies through their employers. In contrast, dividend distribution, while common in participating individual life insurance policies, is not typically applicable to group life policies, as most group life insurance plans are non-participating. The no-fault clause is more often associated with auto or liability insurance rather than life insurance and does not pertain to group life policies. Automatic renewability applies to some insurance products but is not a standard feature of group life policies, which are generally tied to