Manitoba resident Patrice works for ABC Inc. where he is covered by group life insurance. He consults Louise, his insurance agent, because he wants to maintain some life insurance coverage when he retires at age 65. How much of Patrice’s group life insurance can he convert to individual life insurance coverage when he retires?

Group life insurance policies typically include a conversion privilege. This feature allows an employee whose coverage terminates due to retirement or leaving their job to convert their group life insurance into an individual, permanent life insurance policy. A key benefit of this privilege is that no proof of insurability is required. The conversion must be requested within a specific timeframe, usually 31 days of termination. The maximum amount that can be converted without medical evidence is generally set by the insurer, with $200,000 being a common industry standard.

A. Leaving the plan upon retirement is the event that triggers the right to use the conversion privilege, it does not prohibit it.
B. The conversion privilege is specifically designed to be exercised without proof of insurability, and it is limited to a maximum amount, not the full group coverage.
D. Requiring proof of insurability would defeat the primary purpose of the conversion privilege, which is to provide coverage for those who may have become uninsurable.

1. IFSE Institute, Life Insurance (LLQP) – Common Law, 2023, Module 7: Group Benefits, Section 3.2: Group Life Insurance, "Conversion Privilege".

This section details that upon termination of employment, a plan member has the right to convert their group life coverage to an individual permanent policy without providing evidence of insurability, up to a specified maximum amount (e.g., $200,000).

2. Canadian Life and Health Insurance Association (CLHIA), A Guide to Group Life and Health Insurance, 2022, Section: "Life Insurance Benefits", Subsection: "Conversion Privilege".

The guide explains that the conversion privilege is a standard provision in group life insurance contracts, allowing for conversion to an individual policy without a medical examination if exercised within 31 days of leaving the group. It also notes the maximum conversion amounts set by insurers.