Group conversion life insurance

[Moe]

What are the rules around pre-existing conditions when converting your group life insurance policy to an individual life insurance policy after you leave the company.

Here's the situation. Person was hired with a pre-existing condition that impacts expected mortality (would be a decline if applied for individual life insurance). But, as part of the group, gets the standard 1x salary life insurance coverage.

Person now leaves the company, wants to convert the group coverage to individual, but the insurance company is denying it because the condition was pre-existing at hire/joining the group.

Is this legal (in the States)? I thought that an exiting employee was entitled to convert w/o worrying about higher rates/limited coverage -- isn't that the concept of conversion?

Any advice on how to proceed in this situation?

[Don Quijote]

In normal situations, I would expect the employee in your example to be able to exercise the group conversion privilege, although perhaps only to a whole life plan, not to term coverage. To ensure that right is preserved, the employee should send a certified letter to the insurance company stating the desire to convert. Then send a letter to the HR department of the former company asking for a copy of the master contract. You may find that there are unusual conditions in the master contract which allow the conversion to be denied.

[JMO Fan]

Conversions from group policies are usually very well protected by state laws. Regardless of the company's response or the supposed contract limitations, the insured should be entitled to similar coverage. I'd suggest contacting the state insurance department.

[Moe]

Thanks for the help! I passed on the information.