Chapter 3. Group Life

Insurers of group life policies must include a ___________ option permitting the member to convert group life coverage to an individual policy upon the insured's employment termination, removal of a class of insureds, or when the master contract is terminated.

Insurers of group life policies MUST INCLUDE a conversion option permitting the member to convert group life coverage to an individual policy upon the insured's employment termination, removal of a class of insureds, or when the master contract is terminated.

Premiums for group life insurance paid by the employee are not tax-deductible, but the employer can deduct premiums it pays as a ___________ expense.

Premiums for group life insurance paid by the employee are not tax-deductible, but the employer can deduct premiums it pays as a business expense.

Conversion (group) to Individual Policy

The premium is likely to be higher

Under a _______ ________, if a member's coverage is terminated, the member and their dependents may convert their group coverage to individual whole life coverage.

Under a group policy, if a member's coverage is terminated, the member and their dependents may convert their group coverage to individual whole life coverage.

Groups must exist for reasons other than simply to obtain insurance coverage.

In addition, groups must have a minimum number of enrollees due to the fact that larger groups provide better loss projection.

Each member insured under the group plan is issued a ___________ of insurance as evidence of coverage.

Each member insured under the group plan is issued a certificate of insurance as evidence of coverage.

Evidence of insurability cannot be required upon _________. (from group to individual)

Evidence of insurability cannot be required upon conversion.

Group insurance provides insurance for many people under one _______ contract.

Group insurance provides insurance for many people under one master contract.

Group life is differentiated from individual life in that enrollees typically do not have to provide evidence of ____________, are not issued _________ policies, and do not ________ the contract.

Group life is differentiated from individual life in that enrollees typically do not have to provide evidence of insurability, are not issued individual policies, and do not own the contract.

If a group policy requires members to be active within the group, then those who become totally disabled will be allowed to continue their group coverage for a maximum of ___ months after the onset of the total disability. The disabled insured must pay the premium, and the premium cannot be changed.

If a group policy requires members to be active within the group, then those who become totally disabled will be allowed to continue their group coverage for a maximum of six months after the onset of the total disability. The disabled insured must pay the premium, and the premium cannot be changed.

If the individual dies during the __________ period, the full death benefit will be paid by the insurer, regardless of whether the application for individual coverage was submitted.

If the individual dies during the conversion period, the full death benefit will be paid by the insurer, regardless of whether the application for individual coverage was submitted.

If the __________ policy is terminated, each individual member who has been insured under the group contract for at least five years is permitted to convert the group coverage to individual whole life coverage.

If the master policy is terminated, each individual member who has been insured under the group contract for at least five years is permitted to convert the group coverage to individual whole life coverage.

noncontributory

In group insurance, a premium payment method where the premiums are paid entirely by the policyowner, not by member insureds.

Contributory

In group insurance, a premium payment method where the premiums are paid jointly by the policyowner and the insureds.

Individuals must apply for policy ____________ within one month of the master policy cancellation.

Individuals must apply for policy conversion within one month of the master policy cancellation.

___________ insured under the group plan are not party to the contract, only the insurance company and the group entity are.

Members insured under the group plan are not party to the contract, only the insurance company and the group entity are.

The conversion period is _____days after termination from group coverage. This means the individual must apply for individual coverage within ______ days after the date of group coverage termination.

The conversion period is 31 days after termination from group coverage. This means the individual must apply for individual coverage within 31 days after the date of group coverage termination.

Tim's Toy Shop has gone bankrupt and needs to terminate all employees. Tim informs all employees of their right of conversion under the employer-sponsored group life plan. How many days are Tim's employees allotted to convert their group life coverage to individual coverage? Select one: a. 10 days b. 15 days c. 31 days d. 60 days

The conversion period is 31 days after termination from group coverage. This means the individual must apply for individual coverage within 31 days after the date of group coverage termination. The extension does not apply because Tim notified his employees of the conversion right. The correct answer is: 31 days

The conversion period is limited to a maximum of _______ days from the date of group coverage termination.

The conversion period is limited to a maximum of 60 days from the date of group coverage termination.

The group is ___________ as a whole, not each individual.

The group is underwritten as a whole, not each individual.

If the individual is not made aware of their conversion rights, then a _____ day extension period is granted to convert the coverage.

If the individual is not made aware of their conversion rights, then a 15-day extension period is granted to convert the coverage.

Group insurance, as compared to individual insurance policies, has the following distinctions:

-More people are covered by a group plan through their employer than by an individual insurance plan. -It is typically easier to qualify for a group plan than an individual plan. -The unit cost for group insurance is generally less than for a comparable individual plan.

75% Contributory =_____% Noncontributory

75% Contributory = 100% Noncontributory

If an employer discontinues premium payments, the group life policy will be __________.

If an employer discontinues premium payments, the group life policy will be terminated.

In order to ____________ the group life insurance policy, the insurance company must notify the employer of the policy's cancellation and then the employer must notify its employees of the cancellation.

In order to terminate the group life insurance policy, the insurance company must notify the employer of the policy's cancellation and then the employer must notify its employees of the cancellation.

___________ from a group life policy are tax-free, if taken in a lump sum.

Proceeds from a group life policy are tax-free, if taken in a lump sum.

Proceeds taken in installments will be subject to _______ on the interest portion of the installments.

Proceeds taken in installments will be subject to taxes on the interest portion of the installments.

Total Disability

Requirement for full disability income benefits, typically inability to perform work duties. Each policy defines total disability differently.

The conversion option must be exercised during the conversion period, and the individual is covered under the group policy throughout the conversion period.

The conversion option must be exercised during the conversion period, and the individual is covered under the group policy throughout the conversion period.

Which of the following statements is false regarding the conversion option for group life insurance policies? Select one: a. Converted coverage may be term or whole life, depending on the needs of the insured. b. The insured must receive a notice of their right to convert. c. The face amount of the converted coverage may be no more than that under the group coverage. d. Coverage during the conversion period is provided by the group policy.

The converted coverage MUST BE whole life. The correct answer is: Converted coverage may be term or whole life, depending on the needs of the insured.

The converted coverage will have a ______ _______ at least equivalent to that provided under the group policy, less the amount of any new coverage purchased during the conversion period, or $10,000, whichever is less.

The converted coverage will have a face value at least equivalent to that provided under the group policy, less the amount of any new coverage purchased during the conversion period, or $10,000, whichever is less.

Conversion (group) to Individual Policy

The individual whole life premiums will be determined based upon the insured's attained age, and the face amount will be the same as was provided under the group policy.

Group life insurance is either contributory or noncontributory. With a _____________ plan, the group members share the cost of the coverage with the employer and must have at least 75% participation.

With a contributory plan, the group members share the cost of the coverage with the employer and must have at least 75% participation.

Group life insurance is either contributory or noncontributory. With a _____________ plan, the employer pays the entire cost of premiums and must have 100% participation.

With a noncontributory plan, the employer pays the entire cost of premiums and must have 100% participation.