Group Life Insurance

A non-contributory plan requires ___ Participation of all eligible employees

100%

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

A minimum number of employees are required to a participate.

Group Life Insurance

A plan that provides coverage to more than one person, under one policy. Usually written for employee-employer groups. Also written as annually renewable term insurance. Evidence of insurability is usually not required if participant enrolls during the open enrollment period and participants under the plan do not receive a policy, nor do they own or control the policy. They receive certificates, indicating that they are included in the coverage.

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

Accidental.

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

Contributory plan.

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

Everyone must be covered in the group

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

Eligible Groups

Group life insurance plans may be sponsored by employers, label unions, credit unions, associations, and any other organization formed for a reason other than purchasing insurance. Insurance companies may establish a require a minimum number of persons to be insured under a group plan. If the employer pays all premiums for a group life policy, all employees must be included in the plan, unless they are individually uninsurable according to the insurer, or they refuse coverage in writing.

Group Life Characteristics

Group underwriting differs from that of individual insurance. Evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside the normal enrollment period. Instead, the underwriting of group insurance is based on the various group characteristics. Another unique aspect of group underwriting is that the cost of the coverage is based on the average age of the group and the ratio of men to women.

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

Features of Group Insurance

In most cases, the employee's company who is the master policyholder, selects the type of insurance company, which may be either permanent or term insurance. Group life policies must contain a conversion provision that allows individual insured members to convert to an individual plan without evidence of insurability. Most group conversions provisions require that the conversion be made to a whole life policy, as opposed to a term policy.

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.

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

Other Forms of Group Life Insurance

There are other forms of life insurance that are written on a group concept, including the following: - Franchise Life Insurance - Group Credit Life: A type of decreasing term insurance issued to creditors to cover the lives of people who have outstanding loans. - Blanket Life Insurance: Covers a group of people exposed to common hazard. Example: Passengers of an airline or students of a school. No one is specifically named on the policy or furnished with cetificates of insurance. They are covered only for specific hazards stated in the policy.

Noncontributory

When an employer pays all of the premiums, the plan is referred to as a non-contributrory plan. Under this plan, insurance companies will require that 100% of the eligible employees be included in the plan.

Contributory

When the premiums for group insurance are shared between the employer and employees, the plan is referred to as a contributory plan. Under this plan, an insurance company will require that 75% of eligible employees can be included in the plan.

Taxation of Group Life Plans

With group insurance, the premiums that an employer pays for life insurance on their employees are tax deductible to the employer as a business expense. Anytime a business is the named beneficiary of a life insurance policy, or has a beneficial interest in that policy, any premiums that the business pays for such insurance are not tax deductible. When a business pays the premiums for any of the following arrangements, the premiums are not deductible: -Key Employee Insurance -Stock Redemption or Entity Purchase Agreement -Split Dollar Insurance

All individuals covered under a group contract will receive

certificate

Other Rules That Apply To Conversion

the death of the policy owner termination of the master policy disability of the policy owner