Chapter 6 - Group Life Insurance

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 individual whole life policy Explanation: In this situation, a terminated employee may convert to a $25,000 individual whole life policy

A non-contributory plan requires ______ participation of all eligible employees

100%

A non-contributory plan requires______participation of all eligible employees

100% Explanation: The percentage of eligible employees participating in a non-contributory plan is required to be at 100%

Which of the following statements about noncontributory employee group life insurance is FALSE?

A minimum number of employees is required to participate Explanation: Noncontributory employees group life insurance plans cover all eligible employee must be covered

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

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

Which of the following is an important underwriting principle of group life insurance?

Everyone must be covered in the group Explanation: An important underwriting principle of group life is that all or large percentage of persons in the group must be covered by the insurance

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

Full benefits are payable under the Master contract Explanation: An individual is covered under the group policy during the conversion period

An employee of 20 years recenty retired at age 59 1/2. This employee's group life contract can be:

converted to an individual permanent policy at an individual rate Explanation: In this situation, the insured can convert to a permanent policy at the individual rates

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

Accidental Explanation: An AD&D provision is not a required in a group life policy but conversion, grace period and incontestable period is

Company XYZ offers a group Term Life insurance plan to its employees. What does each employee covered under this plan receive?

Certificate of insurance Explanation: Employees covered by an employer-sponsored group Term Life plan all receive a certificate of insurance

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

Contributory

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

Conversion Explanation: The conversion privledge allows an individual to leave the group term plan and continue his or her insurance without evidence of insurability

Which requirement must be met for an association to be eligible for a group life plan?

Group was formed for a purpose other than acquiring insurance Explanation: Group life insurance can be formed just as long as they are formed for a reason other than to purchase insurance

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

Nothing Explanation: Employers cannot report additional taxable income to employees covered under a group life policy paid for by the employer

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period Explanation: An individual must apply for individual coverage within 31 days after the date of group coverge termination. An individual is covered under the group policy during the conversion period

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portions of the premiums paid by the employer may be a tax deduction Explanation: In contributory plan, the employer may file a tax deduction for its share of the premium costs

Group life insurance policies are generally written as

annually renewable term Explanation: Group life insurance policies are generally written as annually renewable term

All individuals covered under a group contract will receive a(n)

certificate Explanation: A person who is insured within a group contract will be given a certificate

What type of group insurance plan involves employees sharing the cost?

contributory plan Explanation: Employees share the cost of group insurance with an employer in a contributory plan

A noncontributory group term life plan is characterized by:

the entire cost of the plan is paid for by the employer Explanation: When an employer provides noncontributort group term life insurance, the employer pays the entire cost of the plan