Handle Credit and Group Life Contexts

Introduction

Some life insurance is attached to a loan. Some is bought for a whole group of people under one contract. Each setting has its own Nevada rules. In each one, the important questions are what event makes the insurer pay, who is allowed to be covered, and what happens when coverage ends.

This lesson shows you how to answer those questions. Mixing up the rules gives wrong answers. One common error treats a loan-linked death policy as disability coverage. Another assumes that someone who leaves a job keeps the same group coverage at the same price.

What You Will Be Able to Do

By the end of this lesson, you should be able to:

• Tell credit life insurance apart from credit accident and health insurance by the event that triggers payment.
• Decide whether a group may receive group life insurance or wholesale life insurance under the Nevada rules taught here.
• Apply the provisions Nevada requires in a group life policy, and spot the ones that do not apply to a creditor's policy on its debtors.
• Separate four situations: one person losing eligibility, the whole policy ending, a death before a converted policy starts, and a late notice of conversion rights.
• Calculate conversion amounts and deadlines from stated facts.

Before you start: This lesson builds on Distinguish business and group coverage, Obtain and keep the right license, and Choose beneficiaries and understand control. It also assumes you know the difference between representations and warranties, and what a nonforfeiture provision does.

All people, businesses, and dollar amounts in this lesson are fictional and stipulated for practice.

Part 1: Credit Insurance — Find the Trigger First

Consumer credit insurance (also called credit insurance) is an umbrella term in Nevada law. The insurance is tied to a debt, and it helps with that debt when a specific event happens. Nevada's definition lists several kinds under the umbrella:

• credit life insurance
• credit accident and health insurance
• credit unemployment insurance
• any other insurance defined in Nevada's credit insurance chapter

This lesson focuses on the first two. Their names sound similar, but they respond to different events.

Credit life insurance: the debtor dies

Credit life insurance insures the life of a debtor in connection with a specific loan or other credit transaction. When the insured debtor dies, it pays toward the debt, in whole or in part.

In plain terms, the death of the borrower is the trigger, and the debt is the target.

Example (fictional): Dana finances a car and buys credit life insurance with the loan. Dana later dies while the loan is still being repaid. Credit life is designed for exactly this event, and the benefit goes toward satisfying the car debt, wholly or partly.

Credit accident and health insurance: the debtor is disabled

Credit accident and health insurance insures a debtor and pays for loan payments or debt that come due while the debtor is disabled as defined in the policy.

In plain terms, the borrower's disability is the trigger, and the payments coming due during that disability are the target.

Change one fact: Dana does not die. Instead, an injury leaves Dana unable to work for four months. Credit life does nothing here, because its trigger is death and Dana is alive. If Dana had also bought credit accident and health insurance, that coverage could respond to payments coming due during the disability. That depends on whether Dana's condition meets the policy's own definition of disability.

The tempting mistake: "Credit life pays if the borrower gets sick." It does not. A living borrower cannot trigger a death benefit. Illness or injury is a disability question. It belongs to credit accident and health insurance, and even then the policy's definition decides.

Check your understanding

Rey has credit life insurance and credit accident and health insurance on a personal loan. Rey is hospitalized for two months and recovers. Which coverage might respond, and what decides whether it does?

Answer: Explanation

Only credit accident and health insurance might respond. Rey is alive, so credit life's trigger (death) never happened. Whether the accident and health coverage pays depends on whether Rey was "disabled as defined in the policy." Being in the hospital does not automatically meet that definition.

Part 2: Which Groups May Receive Group Life Insurance

The basic rule: no groups formed just to buy group life

Nevada starts with a restriction. A group life policy generally may not be delivered in Nevada to a group that was formed for the purpose of buying group life insurance.

The idea is simple. A group is supposed to exist for some reason other than buying the insurance.

There is an exception. The Commissioner may approve delivery to such a group. The Commissioner may not grant approval unless both of these findings are made:

• the policy's benefits are reasonable in relation to the premiums charged, and
• the group is organized and operated in a fiscally sound manner.

Approval is a decision the Commissioner makes. It is never automatic.

Groups the restriction does not apply to

The restriction does not apply to a group whose members:

• are related by blood, marriage, or legal adoption;
• share an ownership interest in a business (or a substantial legal interest or equity in it) and are actively engaged in managing it; or
• otherwise have an insurable interest in each other's lives.

Read the business-owner item carefully. It has two parts joined by "and." Owners who are not actively managing the business do not fit that item.

Two more points

• Group does not mean guaranteed issue. For a policy issued under this section, the insurer may exclude or limit coverage for anyone whose evidence of insurability is not satisfactory to the insurer.
• Out-of-state policies are covered too. These rules apply when a policy issued in another state is offered in Nevada.

Example (fictional): Three siblings want group life coverage among themselves. They are related by blood, so the restriction on purpose-formed groups does not apply to them. Even so, the insurer may still limit coverage for a sibling whose health evidence it finds unsatisfactory.

How a Nevada regulation describes a genuine group

A Nevada regulation sets out how the Commissioner will interpret the phrase "group organized for purposes other than the procurement of insurance."

Be precise about its legal context. The regulation interprets that phrase as it is used in NRS 680A.070 and NRS 685B.030. It is not written as an interpretation of the group life restriction above. It also does not approve any particular group or policy.

Its list is still a clear picture of what Nevada recognizes as a group with a real non-insurance purpose. The regulation says the phrase includes the following:

1. A single employer providing life or health insurance benefits to its eligible employees, officers, directors, or proprietors and their dependents.
2. A multiple employer group or trust holding a policy for several employers' eligible people and their dependents, if the policy is issued under a collective bargaining agreement.
3. A political subdivision, or an agency of one, providing benefits to current or retired employees or officers.
4. An association of people in a business or profession that requires certification or licensure by Nevada or the federal government, as long as membership is limited to those people.
5. An association or trust that acts as policyholder for one or more associations or groups of otherwise unaffiliated people. This category applies only if all six of the following conditions are met: - (a) It was formed without the involvement of any insurance company, administrator, agent, broker, or their representative. - (b) Membership is solicited by someone not affiliated with or compensated by an insurance company, administrator, agent, broker, or solicitor. - (c) The membership solicitation material refers only to the availability of participation in insurance programs. - (d) It has a constitution and bylaws that require regular meetings at least annually and give members voting privileges and active participation. - (e) It conducts substantial educational, charitable, civic, or advisory activities for its members. - (f) No one employed by, representing, affiliated with, compensated by, or otherwise related to an insurance company, administrator, agent, or broker is involved in managing it or soliciting members.

Category 5 is the one that catches people. It is built for associations of unrelated people, so it adds safeguards. Each safeguard checks that the insurance industry did not create or run the group. Failing even one condition means the association does not fit category 5.

Check your understanding

An insurance broker starts the "Desert Hobbyists Club." The broker's office manages the club and recruits members. The club holds no meetings. What is it actually for?

Answer: Explanation

It fails category 5 on several counts. A broker was involved in forming it, which fails (a). A broker-related person manages it and solicits members, which fails (f). It has no required annual meetings, which fails (d). One failure would be enough.

Its facts also suggest it exists mainly to buy insurance. Under Nevada's group life rule, a group formed for the purpose of buying group life cannot receive a group life policy in Nevada unless the Commissioner approves. The Commissioner would first have to find reasonable benefits for the premium and fiscally sound operation.

Part 3: Wholesale Life Insurance — Individual Policies Through a Group

Wholesale life insurance is different from a group policy. Each covered person receives an individual policy. The policies are all on the same form and are arranged and paid for through an employer or association.

Nevada's definition excludes salary savings life insurance and pension trust insurance and annuities. Otherwise, it covers life insurance issued to one of two kinds of groups.

The employer route

The employer route needs three or more employees of any of these:

• a corporation
• a copartnership
• an individual employer
• a governmental corporation, agency, or department

Here, "employees" includes officers, managers, employees, and retired employees. If the employer is an individual or a partnership, it also includes the individual proprietor or the partners.

The association route

The association route needs ten or more members, employees, or employees of members of any of these:

• a trade or professional association
• a labor union
• an association of members in the same or related occupations, profession, or industry

The association or union must also meet three conditions:

• it has had an active existence for at least 2 years;
• it has a constitution or bylaws; and
• it was formed in good faith for purposes other than obtaining insurance.

Features of the arrangement

• Same form, different amounts. Everyone gets the same individual policy form. The only difference is the amount of coverage each person applies for. Dependents may be included or left out.
• Flexible payment. Premiums may be paid to the insurer periodically in any of these ways:
• by the employer, with or without payroll deductions
• by the insured
• by the association or union for its members
• by a designated person acting for the employer, association, or union
• Coverage ends with qualification. Each policy must say that coverage terminates when the insured person no longer qualifies. The policy may allow the coverage to be continued or replaced, but only if the premium, benefits, and other relevant factors match those of a similar individual policy not issued under the wholesale rules.

The tempting mistake: "Three is the minimum for any group." Three applies only to the employer route for wholesale life. The association route requires ten. The Nevada rules in this lesson do not set a universal three-person minimum for group life insurance.

Check your understanding

A professional association was formed in good faith 18 months ago. It has bylaws and 40 members. Does it qualify for the wholesale association route?

Answer: Explanation

No, not yet. It has enough members (ten or more needed), bylaws, and a good-faith non-insurance purpose. However, it has not had an active existence for at least 2 years. Membership size cannot make up for a missing condition.

Part 4: Provisions Every Group Life Policy Must Contain

Scope first

Nevada's Group Life Insurance Law applies only to group life insurance and wholesale life insurance. It does not apply to any group life contract entered into or issued before January 1, 1972. That exclusion also covers that contract's later extensions, renewals, modifications, or amendments, whenever made.

The required-provision framework

A group life policy delivered in Nevada must contain, in substance, the provisions described in this part and in Parts 5–8. An insurer may use different wording only if the Commissioner's opinion is that the wording is either:

• more favorable to the insured persons, or
• at least as favorable to the insured persons and more favorable to the policyholder.

There are three important qualifications:

• Creditor policies get an exception. A policy issued to a creditor to insure its debtors does not have to include the provisions on beneficiary payment, certificates, conversion when eligibility ends, conversion when the policy ends, and death pending conversion. Part 8 covers this.
• Individual standard provisions do not apply. The standard provisions required for individual life policies are not imposed on group life policies.
• Nonforfeiture applies only if the plan is not term. A group policy on a plan other than term must have a nonforfeiture provision the Commissioner considers equitable to the insured persons and the policyholder. It does not have to match the individual-policy nonforfeiture provisions.

The provisions, one at a time

Grace period. The policyholder gets 31 days to pay any premium except the first. Death benefit coverage continues during the grace period. The exception is when the policyholder has given the insurer advance written notice of discontinuance, following the policy's terms. The policy may make the policyholder owe a pro rata premium for the time coverage stayed in force during the grace period.

Fictional example: An employer's monthly group premium is due. On day 10 of the grace period, an insured employee dies, and the employer pays on day 20. Coverage was still in force when the employee died. The grace period is not a free first month, though. It never applies to the first premium.

Incontestability. This provision runs two separate clocks:

• The policy itself: After the policy has been in force for 2 years from its date of issue, its validity cannot be contested, except for nonpayment of premium.
• Each insured person's statements about insurability: A statement cannot be used to contest that person's insurance once the insurance has been in force for 2 years during that person's lifetime before the contest. A statement also cannot be used unless it is in a written instrument signed by the person.

Application and statements. The policyholder's application, if any, must be attached and become part of the contract. All statements by the policyholder or by insured persons are treated as representations, not warranties. An insured person's statement cannot be used in a contest unless a copy of the document containing it has been furnished to that person or to their beneficiary.

Insurability conditions. The policy must state any conditions under which the insurer may require a person to provide evidence of individual insurability before receiving some or all of their coverage.

Misstated age. The policy must specify an equitable adjustment to premiums, benefits, or both if someone's age was misstated. It must also clearly state the method of adjustment.

Who gets paid. Death benefits go to the beneficiary designated by the insured person. If no designated beneficiary is living at the insured's death, the policy's own provision on that situation controls. The insurer may reserve a right to pay up to $500 of the benefit to someone who appears equitably entitled because they paid funeral or other expenses of the insured's last illness or death. That reserved right must be in the policy and set out in the certificate.

This $500 is part of the death benefit. It is not extra money on top of it.

Certificate. The insurer must issue certificates to the policyholder for delivery to each insured person. Each certificate summarizes:

• the essential coverage features,
• who receives benefits, and
• the conversion and death-pending-conversion rights covered in Parts 5–7.

If dependents are covered, one certificate per family unit is enough. For a group policy not made under Nevada law, the Commissioner may require the certificate form to be filed, for informational purposes only.

Premium readjustment. A group life contract may allow the premium rate to be readjusted based on the group's experience.

Dividends and rate reductions. Sometimes dividends or rate reductions exceed what the policyholder, employer, union, or association contributed. The comparison counts this policy and all of the policyholder's other group insurance policies, and it includes administrative expenditures. Any excess must be used by the policyholder for the sole benefit of the insured employees or members. This rule does not apply to debtor groups.

Prompt payment. The insurer must pay proceeds within 30 days after the insured's death. If it pays later, it owes interest from the date of death to the payment date. The interest rate must be at least the insurer's current rate on death proceeds left on deposit.

Check your understanding

An insured employee's statement about their health was in an unsigned online form. Three years later, the insurer wants to use it to contest that employee's coverage. Name two separate problems with using it.

Answer: Explanation

First, an insured person's insurability statement cannot be used to contest their coverage unless it is in a written instrument the person signed. Second, the coverage has been in force for more than 2 years during the person's lifetime, which also bars that use.

A third requirement exists as well. Even a properly signed statement can be used only if a copy was furnished to the person or their beneficiary.

Part 5: One Person Loses Eligibility — Conversion

Suppose a person's group life coverage ends because they stop working for the employer or leave the class eligible for coverage. That person has a conversion right. This means they may buy an individual life policy from the same insurer without evidence of insurability.

The conditions

• Deadline: The person must apply AND pay the first premium within 31 days after the termination. Applying alone is not enough.
• Benefits: The individual policy comes without disability or other supplementary benefits.
• Form: The person chooses any form the insurer then customarily issues for that age and amount, except term insurance.
• Price: The premium is the insurer's then-customary rate for that form and amount, for the person's current class of risk, at the person's attained age on the policy's effective date. It is not the old group rate.

The amount limit

The individual policy cannot exceed:

the group life insurance that ceased minus any group life insurance the person is or becomes eligible for, under the same or another group policy, within 31 days after termination.

One more adjustment applies. Some insurance may have already matured as an endowment payable to the person on or before the termination date. That amount is not counted as insurance that "ceased." It was already payable, so it does not count toward the conversion amount.

Worked example (fictional, stipulated amounts)

Priya has $60,000 of group life coverage and leaves the job. Within 31 days, Priya becomes eligible for $20,000 of group life at a new employer.

• Insurance that ceased: $60,000
• New group eligibility within 31 days: $20,000
• Maximum conversion amount: $60,000 − $20,000 = $40,000

Change one fact: Priya has no new group coverage available within 31 days. Now nothing is subtracted, and the maximum is $60,000.

The subtraction prevents duplicate coverage. Priya can replace the protection that was lost, but not stack a full conversion on top of new group coverage.

The tempting mistakes:

• "Conversion is free." It is not. Priya pays individual premiums, and the first premium is due within 31 days.
• "Conversion keeps the same term coverage at the same premium." It does not. Term forms are excluded, and the rate reflects Priya's current age and risk class.
• "Priya needed 5 years of coverage first." No length-of-coverage requirement applies when one person loses eligibility.

Part 6: The Whole Policy (or a Whole Class) Ends

This situation is different. Here, the group policy itself terminates, or it is amended to end coverage for an entire class of insured people.

A person in that situation has a conversion right only if both of these are true:

• they were insured on the termination date, and
• they had been insured for at least 5 years before that date.

Their individual policy follows the same conditions and limitations as Part 5: the 31-day deadline, no evidence of insurability, no term form, and current rates.

The optional cap

There is one difference from Part 5. The group policy may limit the individual policy to the smaller of two amounts:

1. the coverage that ceased, minus any life insurance the person is or becomes eligible for, within 31 days, under any group policy issued or reinstated by the same or another insurer; or
2. $2,000.

Worked examples (fictional, stipulated amounts)

Each example assumes the person was insured at least 5 years and the policy includes the optional cap.

• Example A: Coverage that ceased is $50,000, and new group eligibility is $49,000. The first amount is $50,000 − $49,000 = $1,000. The smaller of $1,000 and $2,000 is $1,000.
• Example B: Coverage that ceased is $50,000, and new group eligibility is $10,000. The first amount is $40,000. The smaller of $40,000 and $2,000 is $2,000.

Change one fact: The policy does not include the optional cap. In Example B, the ordinary limit from Part 5 applies instead, so the maximum is $40,000.

Change another fact: The person had been insured for only 3 years when the whole policy ended. They have no conversion right under this rule.

The tempting mistakes:

• "$2,000 is always the maximum." The cap is optional, and even when it applies, the answer is the smaller of two figures. That can be less than $2,000.
• "Five years is always required." Five years applies only when the whole policy or class ends. It does not apply when one person leaves employment or the eligible class.

Check your understanding

Which question tells you whether the 5-year requirement applies: "How long was the person insured?" or "Why did the coverage end?"

Answer: Explanation

Ask "Why did the coverage end?" first. If one person's employment or class membership ended, use the Part 5 rule, which has no 5-year requirement. If the whole policy or an entire class was terminated, use the Part 6 rule. Only then does the length of coverage matter.

Part 7: Death Before the Converted Policy Starts

Suppose a person dies during the period when they were entitled to convert (under Part 5 or Part 6), and before the individual policy became effective.

In that case, the amount they could have converted is payable as a claim under the group policy. This is true whether or not they had applied or paid the first premium.

Worked example (fictional): Priya, from Part 5, could convert $40,000. Priya dies on day 20 of the 31-day conversion period without having applied. The group policy pays a $40,000 claim.

Without this rule, the conversion window would leave people unprotected during the short time they need to decide and apply.

Part 8: Late Notice of the Conversion Right

This rule covers group life policies delivered in Nevada after January 1, 1972. A person may be entitled to convert, but not get notice of that right at least 15 days before the conversion period expires. If so, they get an additional period to exercise the right.

• When the extra period ends: 15 days after the person is given notice.
• The outer limit: It can never extend beyond 60 days after the original conversion period expires.
• What counts as notice: Any of these:
• written notice presented to the person
• written notice mailed by the policyholder to the person's last known address
• written notice mailed by the insurer to the last known address the policyholder provided

Worked examples (fictional)

• Notice arrives 10 days after the original period expires. 10 + 15 = the extra period ends 25 days after the original expiry.
• Notice arrives 55 days after the original period expires. 55 + 15 = 70, but the 60-day limit applies, so it ends 60 days after the original expiry.
• Notice arrives 20 days before the original period expires. That is at least 15 days early, so there is no extension.

The key qualification

This rule gives more time to apply for conversion. It does not continue any insurance beyond the period the policy provides.

The late notice is not extra death coverage. Death-pending-conversion protection (Part 7) is tied to the conversion period under the policy.

The tempting mistake: "Missed notice extends coverage." It extends only the time to exercise the conversion right.

Part 9: Creditor Groups Work Differently

A creditor (such as a lender) may hold a group life policy on its debtors. In that case, the borrower's death benefit pays down the debt.

Nevada's required-provision rules treat these policies differently:

• Exempt provisions: The creditor policy does not have to contain these:
• the beneficiary-payment provision, including the $500 expense option
• the certificate provision
• conversion when eligibility ends
• conversion when the policy ends
• death pending conversion
• Required instead: The insurer must give the creditor a form to deliver to each insured debtor. The form must state that the debtor's life is insured and that any death benefit will be applied to reduce or extinguish the debt.
• Dividends: The rule on using excess dividends for insured members does not apply to debtor groups.

These exemptions only mean the law does not require those provisions. They do not stop a creditor policy from offering more if its contract does.

The tempting mistake: "A debtor on a creditor's group policy has the same conversion rights as an employee." The conversion and death-pending-conversion requirements do not apply to creditor policies on debtors.

Independent Practice

Work each case from the rules alone before opening the answer. All facts and amounts are fictional and stipulated.

Question 1: Morgan has only credit life insurance on a furniture loan. Morgan becomes disabled and cannot work for six months. Does the credit life coverage pay any loan payments?

Answer: Explanation

No. Credit life is triggered by the debtor's death, and Morgan is alive. Disability is the trigger for credit accident and health insurance, which Morgan did not buy.

Question 2: A sole proprietor has four employees and wants each of them to receive the same individual life policy form, with amounts varying by choice and the employer paying premiums. Can this be wholesale life insurance? What would change your answer if this were instead an 8-member trade association?

Answer: Explanation

Yes, the employer route fits. It requires three or more employees, and four employees meets that. The proprietor can be counted as an "employee" too.

The 8-member trade association would not qualify. The association route requires at least ten people, plus 2 years of active existence, a constitution or bylaws, and a good-faith non-insurance purpose.

Question 3: Sam leaves a job that provided $80,000 of group life. Within 31 days, Sam becomes eligible for $30,000 under a new employer's group policy. What is the maximum Sam can convert? What must Sam do, and by when?

Answer: Explanation

The maximum is $80,000 − $30,000 = $50,000.

Sam must apply and pay the first premium within 31 days after the termination. The policy can be any non-term form the insurer customarily issues. It comes without disability or other supplementary benefits, and it is priced at the insurer's current rate for Sam's attained age and current risk class. Sam does not need evidence of insurability and does not need any minimum years of coverage.

Question 4: An employer cancels its group life policy. Alex was insured for 6 years and had $30,000 of coverage. Alex has no new group coverage available. The policy includes the optional cap. What can Alex convert? Would the answer change if Alex had been insured for 4 years?

Answer: Explanation

The first amount is $30,000 − $0 = $30,000. The smaller of $30,000 and $2,000 is $2,000.

At 4 years, Alex would have no conversion right under the whole-policy termination rule, because that rule requires at least 5 years of coverage.

Question 5: Jordan's 31-day conversion period ends on the 31st day after termination. Jordan receives written notice of the right 3 days before that deadline. When does Jordan's time to apply now end? Does Jordan have death coverage during the added days?

Answer: Explanation

The notice came fewer than 15 days before the deadline, so an extension applies. It ends 15 days after notice. That is 3 days before the original deadline plus 15 days, which equals 12 days after the original deadline. This is within the 60-day outer limit.

The late-notice rule does not continue any insurance. The extra days give Jordan time to apply. They are not extra death protection.

Question 6: A lender holds a group life policy on its borrowers. A borrower who paid off the loan asks to convert to an individual policy without evidence of insurability. Does Nevada's group life law require the insurer to allow it?

Answer: Explanation

No. The conversion and death-pending-conversion provisions do not apply to policies issued to a creditor on its debtors. The required item for those policies is a form telling each debtor that their life is insured and that any death benefit will reduce or extinguish the debt. The policy could still offer more by contract, but the law does not require it.

Question 7: An insured employee dies on March 1. The insurer pays the beneficiary on April 15. What does the insurer owe besides the benefit?

Answer: Explanation

Payment came more than 30 days after death, so the insurer owes interest from March 1 (the date of death) to April 15. The interest rate must be at least the insurer's current rate on death proceeds held on deposit.

Question 8: Casey has $70,000 of ordinary employer group life coverage (not a creditor policy on debtors). Casey's employment ends, so that coverage ceases. Within 31 days after the termination, Casey becomes eligible for $25,000 under a new employer's group policy. Casey dies on day 12 of the original 31-day conversion period, before any individual policy has become effective. Casey never applied for conversion or paid any premium. How much does the old group policy pay, and why?

Answer: Explanation

The old group policy pays $45,000. Casey's coverage ended because employment ended, so Casey was entitled to convert the coverage that ceased minus the new group eligibility: $70,000 − $25,000 = $45,000. Casey died within the conversion period and before an individual policy became effective, so the amount Casey could have converted is payable as a claim under the old group policy. It does not matter that Casey never applied or paid the first premium.

The claim is not $70,000. The death-pending-conversion rule pays the convertible amount, and the 31-day offset already reduced that amount.

What to Remember

• Find the trigger in credit insurance. Credit life pays toward a debt when the debtor dies. Credit accident and health insurance covers payments coming due while the debtor is disabled as the policy defines it.
• Groups formed to buy group life generally cannot receive it in Nevada without the Commissioner's approval. Approval requires reasonable benefits for the premium and fiscally sound operation. Family groups, actively managing co-owners, and groups with mutual insurable interest are not subject to that restriction.
• Group does not mean guaranteed issue. Insurers may require evidence of insurability on stated conditions.
• Wholesale life means individual policies on one form, issued through 3+ employees or 10+ association members. The association must be 2+ years old, have a constitution or bylaws, and have a non-insurance purpose.
• One person loses eligibility: convert within 31 days (apply and pay), with no evidence, no term form, no supplementary benefits, and current rates at attained age. Subtract new group eligibility from the amount.
• The whole policy or a class ends: the person needs 5 years of coverage. The policy may cap the amount at the smaller of the offset amount and $2,000.
• Death during the conversion window before the individual policy starts: the convertible amount is paid as a group claim, even without an application.
• Late notice adds time to apply (15 days after notice, never past 60 days after the original deadline). It does not continue coverage.
• Creditor policies on debtors do not have to carry the beneficiary, certificate, conversion, or death-pending-conversion provisions. They must tell debtors that death benefits go toward the debt.

Review: Separate death protection from extra application time

• Part 7: Death Before the Converted Policy Starts
• Part 8: Late Notice of the Conversion Right