13 - Group Life Insurance

Abbey's employer recently made group insurance available for its employees as a benefit. After filling out her enrollment card, she is given a(an)? A) application. B) certificate of insurance. C) receipt, D) policy.

B) certificate of insurance. After filling out an enrollment card, an employee is issued a certificate of insurance. This summarizes the coverage terms and explains the employee's rights under the group contract. In these cases, the employer is the applicant and contract policyholder.

To what is a group life plan in which the employer pays the entire cost commonly referred? A) Group permanent plan. B) Group paid-up plan. C) Noncontributory plan. D) Contributory plan.

C) Noncontributory plan. With a noncontributory plan, the employer pays the entire premium for the employees.

The insured is which one of these in group life insurance? A) Certificate holder. B) Policyowner. C) Beneficiary. D) Applicant.

A) Certificate holder. Each employee eligible to participate in the plan fills out an enrollment card and is given a certificate of insurance, which summarizes the coverage terms and explains the employee's rights under the group contract.

All of the following employees would normally be excluded from a group term life plan EXCEPT? A) A full-time employee who has been on the job 2 years. B) Employee works less than 3 months a year. C) Employee with less than 3 months of employment. D) Employee who works part time each week.

A) A full-time employee who has been on the job 2 years. Normally, employees must be full-time workers and a probationary period must pass before they become eligible participants in a group life plan.

Which of the following is NOT considered to be a group permanent plan? A) Group universal. B) Group credit. C) Group ordinary. D) Group paid-up.

B) Group credit. Group credit is not a group permanent plan. Whereas group ordinary, group universal, and group paid-up plans are considered permanent group plans.

All of the following statements pertaining to the conversion privilege of group term life insurance are correct EXCEPT? A) An insured employee typically has 31 days following termination of employment in which to convert the group insurance. B) An insured employee may exercise the conversion privilege regardless of that employee's insurability. C) An insured employee must convert to the same type of coverage as was provided under the group plan (that is, term). D) Insureds who convert their coverage to individual plans pay a premium rate according to their attained age.

C) An insured employee must convert to the same type of coverage as was provided under the group plan (that is, term). Most group conversion provisions require the individual to convert the coverage under a group term plan to a whole life policy.

All of these are requirements of a group life plan EXCEPT? A) A minimum number of participants are required. B) Participants are required to provide evidence of insurability. C) The cost of the plan is dictated by average age of group. D) Participants receive a certificate of coverage.

B) Participants are required to provide evidence of insurability. There is no individual underwriting required with group life insurance.

All of the following are distinguishing characteristics of group life insurance EXCEPT? A) Flow of insureds. B) Group underwriting. C) Master contract. D) Individual policies.

D) Individual policies. Group insurance is not issued as individual policies so the individual does not own the contract. The actual policy, which is called the master policy, is issued to the employer.

What action may the insurer take on future policy anniversaries after a group life master policy has been issued? A) Insurer can deny claims after a group has excessive claims. B) Cancel insurance on group members who become terminally ill. C) Insurer can adjust premium. D) Insurer can make no changes to policy.

C) Insurer can adjust premium. Most group life plans are term plans, which use annual renewable term (ART) insurance for the underlying policy. This gives the insurer the right to increase the premium each year (based on the group's experience rating), and it gives the policyholder the right to renew coverage each year.

Group insurance plans that require employees to pay a portion of the premium are called? A) participatory. B) shared. C) underwritten. D) contributory.

D) contributory. Group plans where employees pay part of the premium are contributory. Group plans where the employer pays the entire premium are noncontributory.

Mary has just signed up to participate in her employer's franchise life insurance program. Which of the following statements is correct? A) The employer is given a certificate of insurance. B) As the "sponsor" of the program, her employer, collects premiums from her and remits them to the insurance company. C) She may not continue the policy if she terminates employment. D) Jackie is allowed to select the type and amount of insurance coverage.

B) As the "sponsor" of the program, her employer, collects premiums from her and remits them to the insurance company. Franchise life insurance is a form of group insurance covering employees of a common employer or are members of a common association. The employer or association is not the master policyholder but simply a "sponser". Each insured is given an individual policy.

All of the following conditions are included in group credit life programs EXCEPT? A) Benefits are paid to the creditor. B) Benefits are paid to the borrower's beneficiary. C) Premiums are usually paid by the borrower. D) The amount of insurance per borrower is limited.

B) Benefits are paid to the borrower's beneficiary. Benefits in a credit life policy are normally paid to the creditor.

In an employer group plan, what is the name of the policy issued to the employer? A) Certificate of insurance. B) Certificate of authority. C) Master contract. D) Group contract.

C) Master contract. In group insurance, the actual policy is issued to the sponsor of the group, which is normally the employer.