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covered employee converts from a C-group term policy to a C-group
conversion UL policy merely by filing an application.
The C-group conversion UL policy was specially designed for
employees converting from the C-group term policy to individual
coverage, and, absent an additional expense, it is issued only to
individuals who convert from the C-group term policy to
individual coverage. An insured employee has the right to
convert, generally without expense, from the C-group term policy
to a C-group conversion policy with equal or less face value if
group coverage ceases because (1) the employee ceases employment,
(2) the employee leaves the class eligible for coverage, (3) the
underlying contract terminates, (4) the underlying contract is
amended to terminate or reduce the insurance of a class of
insured employees, or (5) the underlying contract terminates as
to an individual employer or plan.12 Upon conversion, conversion
credits are transferred from the C-group term policy to the C-
group conversion UL policy in a total amount that would
approximate the cash value that would have been present if a
typical universal life policy had been purchased when the C-group
term policy was first issued. Inter-American and Commonwealth
12 As discussed below, many of the individual petitioners
ultimately received a C-group conversion UL policy by converting
a C-group term policy. Each of these conversions occurred
although none of these five conditions was met. The parties to
the C-group product expected and understood that a C-group term
policy could be converted at any time at the election of the
insured.
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