Employers have no obligation under Tennessee law to offer life insurance to their employees. However, if group life insurance is among the benefits offered to workers, the policy must contain certain provisions (TN Stat. Sec. 56-7-2305).
Policyholders must also be allowed a 31-day grace period within which to make a premium payment before coverage can be terminated.
The policy must include a provision guaranteeing the right to convert to an individual policy if the group member's employment is terminated or the member ceases for any other reason to be a part of the class eligible for coverage. Application for the individual policy must be made, and the first premium paid to the insurer, within 31 days after the termination of the group coverage. The amount of the individual policy may not be in excess of the amount of life insurance that terminated less the amount of any life insurance for which the employee is or becomes eligible under the same or any other group policy within 31 days after the termination.
If the group policy terminates, individuals who have been covered for 5 years must be allowed to convert to an individual policy. The insurer may limit coverage under the individual policy to the lesser of the amount under the group policy or $2,000.
An individual conversion policy may require that application and the first premium payment be made within a specified time period. Notice of the right to convert must be provided at least 15 days before the expiration date of such a period. If timely notice is not provided, the employee must be allowed 15 days after notice is given to elect conversion coverage.