Washington Life Producer Practice Exam

Tim is covered under a group plan and would like to change his group coverage to an individual policy with the same insurer due to employment termination. What describes the change that will take place?

1. Termination

2. Assignment

3. Conversion

4. Reinstatement

The correct answer is: Conversion

When an individual like Tim wants to change from a group coverage plan to an individual policy, the process is referred to as "conversion." Group insurance typically allows members to convert their existing group coverage into an individual policy upon certain occurrences, such as termination of employment. This is beneficial for the individual as it ensures continuity of coverage without the need for a new application process, which may involve health underwriting. The conversion option is particularly significant because it protects the individual from potential difficulties in obtaining insurance, especially if they have developed health issues since the original policy was issued. The individual can usually convert to a plan that provides similar coverage but tailored to their individual needs. The other terms do not apply in this context. Termination refers to the ending of a coverage plan rather than a transition to a new one. Assignment generally involves transferring rights or benefits under an insurance policy to another party, not converting coverage. Reinstatement pertains to bringing a lapsed policy back to active status, which does not apply to the shift from group to individual coverage in this case.