Chapter 13 Group Life Insurance

Under a group life insurance plan, each insured person receives: A) a certificate of insurance. B) an individual policy. C) an insurance statement. D) a booklet of information.

A

How many members must be eligible for insurance under an association group life policy? A) 50% of all members. B) All members employed by the association for more than 2 years. C) All members. D) All highly compensated members.

c

With group life insurance policies, standard provisions that apply to employees who join during the open enrollment period typically include all of the following EXCEPT: A) conversion rights. B) providing proof of insurability. C) a grace period. D) misstatement of age.

B Providing proof of insurability may be required if the employee joins the group plan after the enrollment period, but it is not required when the employee joins the plan during the normal enrollment period. The other answer choices are all standard provisions with group life policies.

All of the following are true about the group conversion option EXCEPT A) The member can convert to any type of insurance except term insurance. B) If the member dies during the conversion period, the insurer will pay the death benefit in full. C) Group life policies must include a conversion privilege D) the option guarantees the member that coverage will continue for 60 days.

D The option guarantees the member that coverage will continue for 31 days.

Which of the following kinds of life insurance is most widely used for group plans? A) Endowment. B) Term. C) Limited pay life. D) Whole life.

B Most group life insurance plans offer term insurance because of the lower cost to the employer.

All of the following are required provisions in a group life insurance contract EXCEPT: A) conversion privilege. B) replacement. C) grace period. D) misstatement of age.

A group life insurance policy must contain a grace period, misstatement of age provision, and conversion privilege as well as incontestability and entire contract provisions

A group life insurance plan participant who has been covered under the plan for four years terminates employment on October 1. On October 22 she dies without having made a decision whether to convert her group coverage to an individual policy. What action will the insurer likely take? A) Underwrite the deceased employee to determine if she would have been insurable, and if so, give the beneficiary the option of exercising the conversion privilege and buying a policy on his life. B) Assume that the deceased employee would have elected the conversion option and pay the death benefit without regard for the deceased employee's insurability prior to death. C) Underwrite the deceased employee to determine if she would have been insurable, and if so, pay the death benefit to the beneficiary. D) No action, because the employee had not elected the conversion option.

B If a terminated employee dies during the conversion period without having attempted to convert life coverage, insurers must presume the deceased would have elected to convert before the end of the conversion period if death had not occurred. Death benefits are therefore still payable.

If an employer pays all the premiums for a group life insurance policy, the policy must insure: A) at least 50% of the eligible employees. B) at least 75% of the eligible employees. C) at least 40% of the eligible employees. D) all eligible employees.

D If an employer pays all the premiums for a group life insurance policy, the policy must insure all eligible, insurable employees. However, if the employees contribute all of the premiums, the policy may be placed in force only if at least 75% of the then-eligible, insurable employees elect to make the required contributions.

Susan, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits? A) It is paid under the new individual policy. B) It is not paid by either policy. C) It is paid pro rata by both plans. D) It is paid under the old group plan.

D If the person insured under the group life insurance policy dies while eligible for conversion but before the individual policy becomes effective, the amount of life insurance that she would have been entitled to have issued under the individual policy is payable as a claim under the group policy, whether or not the individual application or payment of the first premium has been made.