6 - Group Life Insurance

The type of insurance most frequently used in group life plans is?

Annually renewable term. (Annual renewable term insurance gives the insurer the right to increase the premium each year (based on the group's rating) and gives the policyholder the right to renew coverage each year.)

Which of the following is NOT considered to be a group permanent plan?

Group credit.

If an employee in poor health is part of a large group that is acceptable for group life insurance, that employee is?

Eligible for the same type of coverage as other employees.

In an employer group plan, what is the name of the policy issued to the employer?

Master contract.

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

A minimum number of employees is required to participate" (Noncontributory employee group life insurance plans must cover ALL eligible employees at all times.)

All of the following are distinguishing characteristics of group life insurance EXCEPT?

Individual policies.

Which of these factors would an insurer consider when determining whether to accept a group life plan?

Average age.

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

CONVERSION. (The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability.)

An employee under a group insurance policy has the right to name a beneficiary and the right to?

Convert to an individual policy in the event of employment termination.

If an employee wants to enter the group outside the open enrollment period, the insurer may?

Require evidence of insurability. (If an employee does not enroll in the plan during the enrollment period (typically 31 days), the employee may be required to provide evidence of insurability if enrollment is desired at a later date. This is to protect the insurer against adverse selection.)

What does the Group Life underwriting risk selection process help protect insurance companies from?

Adverse selection.

Which of the following makes a group life policy different from an individual life policy?

Lower premiums. (The primary reason for a group life plan having lower premiums is the lower administrative, operational, and selling expenses associated with servicing one contract, as opposed to several individual contracts.)

Insurers require that a minimum number of trade association member employees participate in a group insurance plan in order to?

Minimize adverse selection. (The larger the group to be insured, the more predictable will be the expected losses from the group.)

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?

Portion of the premiums paid for by the employer may be a tax deduction.

In group life policies, individual certificates are given to?

Each insured. (Each employee eligible to participate in a group plan fills out an enrollment card and is given a certificate of coverage. This certificate summarizes the coverage terms and explains the employee's rights under the group contract.)

A non-contributory health insurance plan helps the insurer avoid?

Adverse selection. (Because all eligible employees are usually covered, noncontributory plans are desirable from an underwriting standpoint because adverse selection is minimized.)

Group insurance plans that require employees to pay a portion of the premium are called?

Contributory.

What action may the insurer take on future policy anniversaries after a group life master policy has been issued?

Insurer can adjust premium. (Most group life plans are term plans, which use annual renewable term (ART) insurance for the underlying policy. This gives the insurer the right to increase the premium each year (based on the group's experience rating), and it gives the policyholder the right to renew coverage each year.)

Abbey's employer recently made group insurance available for its employees as a benefit. After filling out her enrollment card, she is given a(an)?

Certificate of insurance. (This summarizes the coverage terms and explains the employee's rights under the group contract. In these cases, the employer is the applicant and contract policyholder.)

If group life insurance premiums are paid totally by the employer, the minimum percent of eligible employees required to be covered is?

100%

All of the following employees would normally be excluded from a group term life plan EXCEPT?

A full-time employee who has been on the job 2 years.

When an employer pays the entire premium of a group plan, the plan is called?

Noncontributory. (In a noncontributory plan, an employer pays the entire premium and the employee is not expected to contribute.)

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. (In this situation, a terminated employee may convert to a $25,000 individual whole life policy.)

Most employers will establish benefit schedules according to all of the following EXCEPT?

Age. (Most employers will establish benefit schedules based on an employee's earnings or position within the company. A flat benefit to each employee may also be an option. An employee's age is not taken into account.)

All of the following statements pertaining to the conversion privilege of group term life insurance are correct EXCEPT?

An insured employee must convert to the same type of coverage that was provided under the group plan (that is, term). (Most group conversion provisions require the individual to convert the coverage under a group term plan to a whole life policy.)

Which of the following statements about the certificate of insurance is true?

It serves as evidence of an employee's coverage.

Converting a group plan to permanent life insurance involves?

The conversion being applied within 1 month of termination.

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

Everyone must be covered in the group. (An important underwriting principle of group life is that all or a large percentage of persons in the group must be covered by the insurance.)

All of the following conditions are included in group credit life programs EXCEPT?

Benefits are paid to the borrower's beneficiary. (Benefits in a credit life policy are normally paid to the creditor.)

The insured is which one of these in group life insurance?

Certificate holder. (Each employee eligible to participate in the plan fills out an enrollment card and is given a certificate of insurance, which summarizes the coverage terms and explains the employee's rights under the group contract.)

State insurance laws generally allow a number of groups to hold blanket life insurance policies. All of the following are examples of groups eligible for blanket life insurance EXCEPT?

A start up company to cover the health insurance needs of its employees. (Blanket life insurance policies cover eligible groups for blanket LIFE insurance , not health insurance.)

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

Accidental. (An AD&D provision is not required in a group life policy.)

Jackie has just signed up to participate in her employer's franchise life insurance program. Which of the following statements is CORRECT?

As the "sponsor" of the program, her employer collects premiums from her and remits them to the insurance company. (Franchise life insurance is a form of group insurance covering employees of a common employer or are members of a common association. The employer or association is not the master policyholder but simply a "sponsor". Each insured is given an individual policy.)

To what is a group life plan in which the employer pays the entire cost commonly referred?

Noncontributory plan.

All of these are requirements of a group life plan EXCEPT? .

Participants are required to provide evidence of insurability.

A type of group that has a constitution and bylaws and has been organized for purposes other than obtaining insurance is called a(n)?

Association or labor group. (They are organized and maintained in good faith for purposes other than obtaining insurance.)

A method of marketing group benefits to employers who have a small number of employees is the?

MET (A method of marketing group benefits to employers who have a small number of employees is the multiple employer trust (MET). METs may provide a single type of insurance (such as health insurance) or a wide range of coverage (life, medical expense, and disability income insurance).

Which of the following statements regarding group life insurance plans is CORRECT?

Group insurance, per unit of benefits, is available at rates lower than those for individuals. (Group insurance generally is available at rates lower than those for an individual because of the lower administrative, operational, and selling expenses associated with them.)

What are blanket life policies?

Policies that cover a group of people exposed to a common hazard. (Blanket life insurance covers a group of people exposed to a common hazard. Individuals do not need to apply for blanket coverage and insurers do not need to provide each person with a certificate of coverage. Insureds are not specifically named in the policy because coverage is temporary.)

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

Employee. (An employee would be a certificate holder under a trustee group life policy.)

All of the following statements about group life insurance for employees are true EXCEPT?

Evidence of insurability is normally required of each participant.

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

Contributory plan. (Employees share the cost of group insurance with an employer in a contributory plan.)

The coverage, conditions, and limitations in the master policy of a group contract can be found in which document?

Certificate of coverage and benefits.

A person who is insured within a group contract will be given a?

Certificate.

Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured.?

Certificate.

Tim is covered under a group plan and would like to change his group coverage to an individual policy with the same insurer because of employment termination. Which of these describes the change that will take place?

Conversion.

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

Converted to an individual permanent policy at an individual rate.

A group life insurance plan must insure all eligible employees if the?

Employer pays the entire premium.

The conversion privilege under a group life plan allows an employee to convert to a(n)?

Individual plan upon employment termination.