Chapter 7 Exam: Group Life Insurance

All of the following are considered characteristics of group life insurance, EXCEPT a. certificates of insurance b. conversion privilege c. Individual policies d. Master policy

c. Individual policies Characteristics of group life insurance include all of these, EXCEPT "individual policies."

Who are the parties to the master contract in a group life insurance policy? a. Insurer and employee b. Employer and employee c. Insurer and employer d. Employer and beneficiary

c. Insurer and employer The actual policy for group life insurance, which is called the master policy, is issued by the insurer to the employer.

Employee participation in a noncontributory group life plan must be a. 25% b. 50% c. 75% d. 100%

d. 100% 100% of all eligible employees must participate in a noncontributory group life insurance plan.

How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? a. Tax deductible to the employee b. Partially taxable to the employer c. Fully taxable to the employer d. Taxable income to the employee.

d. Taxable income to the employee The IRS requires the cost of employer-provided group life insurance above $50,000 to be taxable as income to the employee.

Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is this process called? a. replacement b. conversion c. transformation d. reinstatement

b. conversion Changing group term insurance into an equal amount of individual permanent coverage is called a conversion.

How does underwriting differ between group life and individual life insurance? a. group life insurance normally charges a higher premium b. Individual life insurance is normally written as an annually renewable term policy c. Individual life insurance can normally be converted to group life insurance d. Medical questions must be answered on individual life insurance

d. Medical questions must be answered on individual life insurance One difference between group and individual life insurance underwriting is that medical questions must be answered on individual life insurance.

Which of the following describes a contributory group insurance plan? a. All of the premium is paid by the employer b. Part of the premium is paid by the employee c. Employees are eligible for policy dividends d. Federal government contributes a portion of the employee's premium

b. Part of the premium is paid by the employee A contributory group insurance plan is one in which employees share the cost of the premiums with the employer.

Which of the following describes a contributory group insurance plan? a. all of the premium is paid by the employer b. Part of the premium is paid by the employee c. Employees are eligible for policy dividends d. Federal government contributes a portion of the employee's premium

b. Part of the premium is paid by the employee A contributory group insurance plan is one in which employees share the cost of the premiums with the employer.

Which of the following is NOT a characteristic of the conversion privilege? a. Ex-employee pays the premium for the converted policy b. Proof of insurability is not required c. Employer pays the premium for the converted policy d. Conversion must take place within 31 days of employment termination

c. Employer pays the premium for the converted policy All of these statements about the conversion privilege are true EXCEPT "Employer pays the premium for the converted policy"

Which of the following is NOT a requirement for a terminated employee that has exercised the conversion privilege? a. convert within 31 days b. Convert up to the previous amount of group coverage c. Provide proof of insurability d. Premium must be paid

c. Provide proof of insurability A terminating employee who wants to exercise the conversion privilege must meet all of these requirements EXCEPT supply evidence of insurability.

Employer-provided group life insurance is exempt from income taxation up to a. $10,000 b. $25,000 c. $40,000 d. $50,000

d. $50,000 The IRS requires the cost of employer-provided group life insurance above $50,000 to be taxable as income to the employee.