Quiz: Group Life Insurance

For any given amount of coverage, how does the cost of group life insurance generally compare to the cost of individual life insurance? A. Group life is less expensive. B. Group life is about the same cost. C. Group life is more expensive. D. Group life is more expensive for smaller companies only.

A. Group life is less expensive. Per unit of benefits or coverage, group life insurance is less expensive than individual life insurance because it has lower administrative and operational costs.

What does a group sponsor receive under a group life insurance policy to show it is the policyowner? A. master policy B. group certificate C. certificate of authority D. certificate of insurance

A. master policy

Mary lost her job on June 15. She wants to convert her group life insurance policy to an individual policy. To do so, Mary must apply for a conversion policy by: A. September 15 B. July 16 C. December 15 D. June 30

B. July 16 Mary probably must apply for a conversion policy within 31 days after June 15, the date she lost her job. If she fails to do so within this period, she will not be able to convert to an individual policy.

Which of the following employees of ABC Computers could NOT convert their group life coverage to an individual policy? A. Paul, who retired this month B. Emily, who was laid off from her job this month C. Bill, who is on long-term disability this month D. Sue, who voluntarily terminated employment this month to work for a competitor

C. Bill, who is on long-term disability this month Employees can convert their certificate of insurance to an individual policy upon retirement or termination, regardless of the circumstances surrounding the termination.

All of the following statements about credit life insurance are correct EXCEPT: A. As the borrower's loan balance decreases, the amount of coverage also decreases. B. The creditor is the policyowner and the borrower is the insured. C. It is only offered on a group basis. D. It is usually sold in the form of decreasing term insurance.

C. It is only offered on a group basis. Credit life insurance covers the life of a borrower in the amount of his or her outstanding loan. The coverage is matched to the declining balance on the loan. As the insured's loan balance decreases, so does the coverage.

Jake and seven of his friends are self-employed in different fields. They want to form a group so that they can buy group life insurance. Which of the following most accurately describes their best option? A. Jake and his friends could form a multiple employer welfare arrangement to get group life coverage. B. Jake and his friends would be eligible to purchase a group life policy if they find at least two more people to join their group. C. Jake and his friends should consider buying individual life policies, as they are not eligible for group insurance. D. Jake and his friends could form an association group to get group life coverage.

C. Jake and his friends should consider buying individual life policies, as they are not eligible for group insurance. To qualify for group life insurance coverage, a group must exist for some reason other than to get insurance.

Which statement about credit life insurance is most correct? A. If the borrower dies, the insurer will pay the death benefit to the borrower's beneficiary. B. Increasing term is most often used for credit life insurance. C. State laws typically set a maximum coverage limit that creditors can offer to borrowers. D. Creditors can require borrowers to buy credit life insurance as a condition for obtaining a loan.

C. State laws typically set a maximum coverage limit that creditors can offer to borrowers. State laws, which vary among states, set the rules for maximum coverage limits that creditors can offer borrowers. Generally, the amount of coverage cannot be more than the amount of debt.

Which statement about multiple employer welfare arrangements (MEWAs) is correct? A. The group must have a minimum of ten employers. B. They must be self-insured. C. They are usually created by employers in the same industry. D. They must be fully insured.

C. They are usually created by employers in the same industry. A MEWA can be fully insured or self-insured.