Maryland Life and Health Insurance License Practice Exam

What type of policy may be issued by the insurance company at their option to cover a dependent?

1. Life Insurance

2. Health Insurance

3. Accidental Death Benefit

4. Separate Converted Policy

The correct answer is: Separate Converted Policy

A separate converted policy is a type of insurance coverage that may be issued by an insurance company specifically to cover dependents under certain circumstances. This option allows dependents to have a policy that is separate from the primary insured individual, especially when the relationship or coverage needs change, such as when the primary insured leaves the company or when dependents age out of a parent's policy. This approach provides continuity of coverage for dependents while allowing the insurer flexibility in underwriting terms and conditions based on the specific needs of the population insured. This is particularly relevant in family plans where coverage for dependents might need to be converted to individual policies due to changes in status, such as when a child becomes an adult or a spouse is no longer eligible for coverage. In contrast, life insurance generally provides coverage upon the death of the insured individual, health insurance focuses on medical expenses, and an accidental death benefit is a specific rider or policy feature that provides additional coverage in cases of death due to an accident, rather than functioning as a separate policy option for dependents.