Chp. 5

Conversion Privilege

Allows the policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue).

Contributory Plan

An employee group insurance plan in which employees share the cost.

FEGLI

Federal Employees Group Life Insurance -- provides group life insurance for all other federal employees or civil service workers.

Franchise Insurance

Life or health insurance plan for covering groups of persons with individual policies uniform in provisions, although perhaps different in benefits. Solicitation usually takes place in an employer's business with the employer's consent. Generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance.

SGLI

Serviceman's Group Life Insurance -- provided up to $400,000 ($50,000 increments) for full time members of the armed services. coverage provided is group term life insurance and all active members are covered unless they choose otherwise.

Noncontributory Plan

The employer pays the entire cost of the plan.

Group Insurance

a way to provide life, health, or both kinds of insurance coverage for a number of people under one contract. usually written for employee-employer groups most often written as ANNUALLY RENEWABLE TERM POLICY

Credit Policies

designed to help the insured pay off a loan in the event they are disabled due to an accident or sickness or in the event they die. if disabled, policy provides monthly benefit payments equal to the monthly loan payments due. if dies, lump sum payment made to the creditor to pay off loan. Credit policies typically cannot exceed amount of loan since its the only amount the creditor has insurable interest in.

Certificate of Insurance

document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals. with Group, the employer (typically) is the policy owner and maintains a master policy. the Insured, employees (typically) receive a certificate of insurance in lieu of a policy.

Noncontributory

employee benefit plan under which the employer bears the full cost of the employees' benefits in most states, the plan must insure 100% of eligible employees

Contributory

group insurance plan issued to an employer under which both the employer and employees contribute to the cost of the plan. generally, 75% of eligible employees must be insured in most states.

Conversion to Individual Policy

if member's coverage is terminated, the member and his dependents may convert their group coverage to individual whole life coverage, without having to show proof of insurability.

Group Policy Termination

if the master policy is terminated, each individual member who has been insured for at least 5 years is permitted to convert to an individual policy, providing coverage up to the face value of the group policy.

Conversion Period

individual must apply for individual coverage within 31 days after the date of group coverage termination. an individual is covered under the group policy during the conversion period.

Blanket Health Policies

issued to cover a group exposed to the same risks, but the individuals within the group are constantly changing. airline or bus company to cover its passengers or a school to cover its students. No one is named on policy and no certificate of coverage given. Individuals are only covered for the common hazard. no certificate of coverage issued with blanket health plan compared to group insurance.

A Master Policy

issued to the employer under a group plan; contains all in the insuring clauses defining employee benefits. individual employees participating in the group plan receive individual certificates that outline highlights of the coverage.

Determining eligibility -- TAX

must benefit at least 75% of all employees. At least 85% of all participating employees must not be key employees.

Group Credit Life

set-up by banks, finance companies, etc., to provide that if the insured dies before a loan is repaid, the policy benefits will be used to settle the loan balance. premiums are based on claims experience and expense factors, not necessarily the borrower's age. Premiums are usually paid by the insured. Decreasing term policy commonly used.

Franchise Life Insurance

used when participants are employees of a common employer (i.e. employer may operate several companies) or are members of a common association or society. the employer/association/society is a sponsor of the plan and may or may not contribute to the premium payments. unlike employers group plan, each individual will be issued an individual policy which will remain in force as long as premiums are paid and the employee/member maintains their relationship with the sponsor.