State RegulationsTX specificDifficulty 2/5
A Texas employee covered under a group life policy with dependent coverage terminates employment and her group coverage ends. What is the effect on the dependent coverage?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 1131.151 and Chapter 1131, dependent coverage under group life is incidental to the employee's coverage and ends when the employee's coverage or eligibility ends; it cannot survive on its own. The dependent is then entitled to the conversion privilege, which allows an individual policy without evidence of insurability. Practically, a Texas agent should tell a departing employee that both the employee and covered dependents have conversion rights, and that neither can simply be carried over to another employer's plan.
Why the other options are wrong
- A) is wrong because group dependent coverage is not portable to another group; the remedy is conversion to an individual policy.
- C) is wrong because there is no free continuation of group dependent coverage after the employee's coverage ends.
- D) is wrong because dependent coverage is tied to the employee's eligibility; paying premiums on it does not keep it alive after the employee leaves the class.
Memory hook
Dependent rides along, and stops when the employee stops.