State RegulationsTX specificDifficulty 2/5
When a Texas group life insured converts to an individual policy under the group life conversion statute, what form of policy must the insurer issue?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 1141.354, the converted policy must be an individual policy of a class then customarily issued by the insurer, with term insurance excluded from the conversion options, and the premium is set at the insured's attained age at conversion. The practical consequence is that converted coverage costs far more than the group rate, so an agent should prepare the client for the rate jump in advance to keep the new policy from lapsing in its first year.
Why the other options are wrong
- A) The insurer's choice is limited to its customary individual forms, and no medical examination may be required.
- B) Term insurance is excluded from the conversion options.
- D) The group certificate is not converted into a policy, and the group rate does not continue after conversion.
Memory hook
Convert to permanent, price at attained age — expect a jump.