26-17-118. Conversion on termination of eligibility.

(a) If the insurance, or any portion of it, on a person or dependent of a person covered under the policy ceases because of termination of employment or of membership in any of the classes eligible for coverage under the policy, the insurer shall offer to issue to him, without evidence of insurability, an individual life insurance policy without disability or other supplementary benefits, provided:

(i) Application for the policy shall be made, and the first premium paid to the insurer, within thirty-one (31) days after termination;

(ii) The policy, at the person's option, shall be on any one (1) of the forms customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;

(iii) The policy shall be in an amount not exceeding the amount of life insurance which ceases because of the termination less the amount of any life insurance for which the person is or becomes eligible under the same or any group policy within thirty-one (31) days after the termination, provided that any amount of insurance which matures on or before the date of such termination as an endowment payable to the person insured, whether in one (1) sum, in installments or in the form of an annuity, for the purposes of this provision, shall not be included in the amount which is considered to cease because of the termination; and

(iv) The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person then belongs and to his age attained on the effective date of the individual policy.

(b) Subject to the conditions set forth in subsection (a) of this section, the conversion privilege is available:

(i) To a surviving dependent, if any, at the death of the employee or member concerning the coverage under the group policy which terminates by reason of the death; and

(ii) To the dependent of the employee or member upon termination of the dependent's coverage if the employee or member remains insured under the group policy and if the dependent ceases to be a qualified family member under the group policy.