Group Life Insurance Greenville SC
Group Life Insurance Greenville SC – Similar to individual life insurance policies, group life policies are identified in part by certain standard provisions, including
- a grace period for paying the premium, generally 31 days after the due date;
- incontestable beyond two years except for premium nonpayment or evidence of fraudulent misstatements on the application;
- entire contract provision which states that only the application and policy document itself constitute the policy;
- a provision which sets forth conditions, if any, under which the insurer can require an individual participant to provide evidence of insurability;
- a provision granting participants the right to designate a beneficiary; and
- a provision which stipulates the right of terminated participants to convert their group life coverage to an individual policy of equal face amount without providing evidence of insurability.
Contributory vs. Noncontributory Group Plans
The funding for a group insurance plan is usually provided entirely by the plan sponsor or premiums may be split between the sponsor and the plan participants. Noncontributory plans are those where the premium is paid entirely by the employer. In contributory plans, some portion of the premium is paid by the employee.
As a general rule, all eligible group members must be covered in noncontributory plans. Contributory plans, however, generally require that at least 75% of employees participate. Contributory plans cannot require a group member to participate.
Also as a general rule, group life insurance plans are noncontributory while group health insurance plans are commonly contributory plans.
Conversion Privilege
Ordinarily, when a group member leaves the group, he or she forfeits his or her group term life insurance coverage. This represents a potential problem for former group members who are uninsurable. Finding a new policy for such individuals could be difficult or even impossible. To plan for this potential eventuality, group life plans include a conversion privilege that provides participants with the right to covert coverage to an individual policy with an equal face amount without the need to provide evidence of insurability.
In the most cases the insured can convert his group coverage to up to the amount of coverage he had under the group plan. Also, the insured usually has 31 days to request a conversion, counting from the effective retirement or termination date. The insured retains coverage during this 31 day window and any group benefits are payable.
Some insurers offer to convert the group policy to term insurance upon termination, but usually the conversion is to a life policy other than term life.
In the event of termination of the group plan itself, conversion is often much more limited, typically to $2,000 or the amount of coverage at termination, whichever is less.
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