When a group life insurance policy in California is discontinued, eligible certificate holders must be:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
When a group life insurance policy in California is discontinued, the insurer must give notice and offer eligible certificate holders the opportunity to convert to an individual policy or to obtain replacement coverage. This conversion right protects insureds who would otherwise lose their protection through no fault of their own when the group plan ends. The conversion offer must come from the insurer, and eligible members must be told of their right in time to exercise it. Automatic renewal of the discontinued group plan at the same premium, refunds of all premiums paid, and involuntary transfers to a new employer's plan are not the statutory remedy. The conversion right preserves continuity of coverage for group members.
Why the other options are wrong
- B) A discontinued group plan does not continue automatically at the same premium. The protection the law provides is the conversion right, which lets eligible members move to an individual policy rather than continue the old group plan.
- C) Premiums already paid have funded coverage under the group plan, so a full refund is not the remedy. The statutory protection is continuing coverage through the conversion or replacement option, not a return of premiums.
- D) An insured cannot be forced onto another employer's plan without consent. The conversion offer must come from the insurer, and the member chooses whether to convert rather than being transferred involuntarily.
Memory hook
Group plan ends; members get a conversion lifeline to individual coverage.