Chapter 6: Exam Review

The entire cost of the plan is paid for by the employer - When an employer provides noncontributory group term life insurance, the employer pays the ENTIRE COST of the plan

A noncontributory group term life plan is characterized by:

Nothing - Employers CANNOT report additional taxable income to employees covered under a group life policy paid by the employer

If a corporation pays the premium on a group life policy for its employee, the corporation is required to report how much additional taxable income for each employee?

Full benefits are payable under the Master contract (group policy): - An individual is covered under the group policy during the conversion period. Therefore, her benefits from the original Group policy are still eligible to be paid out upon death during conversion period

S, while in the process of converting here group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?

Employees: An employee would be a certificate holder under a trustee group life policy

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Portion of the premiums paid for by the employer may be a tax deduction: - In a contributory plan, the employer may file a tax deduction for its share of the premium costs it paid for its employees that fiscal year

Under federal tax laws, what is the tax treatment for an employer providing $50k of a contributory group Term Life plan to all its eligible employees?

Conversion feature: The conversion feature allows an individual to leave the group term plan and continue their insurance without providing evidence of insurability

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

- A minimum number of employees is required to participate - Noncontributory employee group life insurance plans MUST COVER ALL of eligible employees at ALL times

What is FALSE about noncontributory employee group life insurance?

Everyone must be covered in the group: - An important underwriting principle of group life insurance is that all, or a large % of the persons in the group MUST be covered by the insurance

What is an important underwriting principle of Group life insurance?

"Policy proceeds WILL BE PAID if the employee dies DURING the conversion period": - An individual MUST apply for individual permanent coverage within 31 days AFTER the date of group coverage termination. An individual is covered under the group policy during the conversion period

When an employee is terminated, what happens to be true about a group Term life conversion?

Accidental (AD&D) - An AD&D provision is NOT required in a group life policy

Which provision is NOT a requirement in a Group life policy?