Privilege Life Insurance
When an individual converts his group policy to an individual policy it can be stated as a conversion privilege life insurance. The group policy holder then has to notify the covered individuals of the conversion rights and failure to do so could impact the individuals right to conversion and you may have to face legal actions. The converted benefits are different from the group benefits.
Most of the group plans allow conversion of life insurance when the eligibility under the group is lost. The eligibility is lost due to termination of employment, death of employee or member which can cause the surviving spouse or children to lose their eligibility, when a covered person reaches a certain age, divorce of a covered spouse or termination of the plan itself.
In case of termination of the group plan there may be no conversion rights for members. However in other cases if you plan to continue the plan it would be necessary to give the terminating individual Notice of Conversion on two separate occasions. One is upon the initial loss of eligibility and secondly upon expiration of the continuation period.
To give a proper notice of conversion rights you need to inform within 10 days from termination of coverage by completing Part A and answering all questions as well as including your date and signature. The form is to be given to the terminating individual or posted to his/her address. To get more information about how to complete this form you can call the conversion unit and it is important that you retain a copy for your own personal account.