What happens to a group life contract when an employee retires after 20 years of service?

When an employee retires after 20 years of service, the group life insurance contract offers the opportunity to convert the coverage into an individual permanent policy at an individual rate. This option is particularly important because, without this conversion provision, retirees would potentially lose their life insurance benefits due to the termination of the group policy upon retirement.

In cases where group policies are set up, they typically include clauses that allow employees to convert their group life insurance to a permanent individual policy without needing to provide evidence of insurability, such as health assessments. This means that the employee can maintain some level of life insurance coverage after leaving the workforce, even if their health status changes or deteriorates, which is a crucial safety net for those entering retirement.

The other options do not reflect the standard provisions found within group life insurance policies. A group's life insurance does not automatically expire or cancel upon retirement; rather, it provides an avenue for continued coverage through conversion.