Group Life Insurance

In a noncontributory plan, what percentage of employees must the plan cover? Do they contribute to the cost of the plan?

100%, no they do NOT contribute to the cost of the plan

After ___ days during the enrolment period, an employee may have to provide evidence of insurability

31 days

An individual must apply for individual coverage within ____ days after the date of group coverage termination.

31 days

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

5

When is a business eligible to write off premiums on taxes?

Must benefit at least 70% of employees. At least 85% of all participating employees must not be key employees.

Are certificates of coverage issued on a blanket health plan?

No

Does an insured have to prove insurability when converting a policy? (Conversion Privilege)

No

Is there a minimum number required for a group life insurance policy?

No, but a company may have a minimum requirement

What negatively effects an insurance company's persistency?

Policies replaced by other insurers, canceled policies by the insured, or lapses due to nonpayment

What is the cost of coverage in a group life plan based off of?

The average age of the group and the ratio of men and women

What are some rules that apply to a conversion?

The death of a policy owner Termination of the master policy Disability of the policyowner

If an employer pays for a group plan, who holds the master policy? Who would receive a certificate of insurance?

The employer would receive the master policy, and the employees would receive a certificate of insurance rather than a policy.

In most cases, under a group life insurance plan, who selects the type of insurance coverage?

The master policy holder, the employee's company. This can either be permanent or term life insurance

When are Blanket Health Plans issued?

They may be issued to an airline or bus company to cover the passengers, or to a school to cover the students

What do most conversion policy provisions require?

They require the conversion be made to a whole life policy as opposed to a term life policy

When can a business NOT write off group life premiums for their taxes?

When they are named as the beneficiary, or have beneficial interest in the policy. If paid by the employees

Generally, what percentage of employees must be insured in a contributory plan? Do they have to contribute to the cost of the plan?

75%, Yes they must contribute to the cost of the plan.

Generally speaking, companies aim for ____% persistency after three year, and ____% consistency after five years. Meaning that ____% of the policies written after five years should still be active

80% 60% 60%

Proceeds from a group life policy are tax-fee if taken in ____. If taken in ___, they are subject to taxes on interest.

A lump-sum. Installments.

The most common types of group permanent (whole life) plans are:

Group Ordinary, Group Paid-Up, and Group Universal

What do individual employees participating in a group plan receive which outlines the highlights of coverage?

Individual certificates

If an employer pays for all premiums for a group life policy, all employees must be included in the plan, unless they are ____ Or they ___

Individually uninsurable according to the insurer, or they refuse coverage in writing

If a business pays for any of the following arrangements _____ _____ _____ Premiums are NOT tax deducible

Key Employee Insurance Stock Redemption or Entity Purchase Agreement Split Dollar Insurance

The actual policy, called the ____, is issued to the employer

Master Policy

Group Life insurance is cheaper because of lower

Administrative, Operation, and selling expenses associated with group plans

If contributory, an employee must approve of ____

An automatic payroll deduction

Group life is usually written as ____

Annually, renewable term insurance

Since the individual does not own or control the policy, they are issued a _____ to prove they have coverage

Certificate of insurance

In most cases, an employee must be ___ & ___ to qualify for a group life insurance policy

Full time & actively working

Employees are called ____ in a group life plan, and employers are called ___

Employees: Certificate holders Employers: Contract Holders

Who usually gets group life insurance policies?

Employers for employees

Group Life Insurance may be sponsored by:

Employers, Labor Unions, Credit Unions, Credit/ Debit Groups, Fraternal Organizations, Trade Associations, Trustee Groups (established by two or more employers/labor unions) and many other organizations who are formed for a reason other than purchasing life insurance

T/F An individual is not covered under the group policy during the conversion period

False, they ARE covered

If Franchise Insurance is life insurance, what is another name it is known by?

Wholesale Insurance

Does group life underwriting differ from individual underwriting? How?

Yes, evidence of insurability is typically not required unless they are enrolling in coverage outside of the normal enrollment period. Instead, the underwriting is based on the various group characteristics.

Group insurance is typically issued as ____ insurance, which provides a fixed amount of coverage through the term of contract

Level Term Insurance

What sets apart group insurance & individual insurance?

Lower Cost Master contracts rather than individual policies The individual does not have to provide proof of insurability, as group underwriting is involved (Unless they enroll outside of the enrollment period) Flow of insured exiting and entering the policy

Are companies with a lower persistency more profitable than companies with a higher persistency?

No, companies with a higher persistency are more profitable and stable than companies with a lower persistency

Is evidence of insurability usually required for group insurance when a participant enrolls during an open enrollment period?

No, it is not required

Do people receiving a blanket life/health policy get a certificate of insurance? Is anyone named on the policy?

No, no one is specifically named on the policy and no one gets certificates of insurance

Do participants under a group life insurance plan recieve, own and control the policy?

No, they do not. Instead, they receive certificates that indicate they are included under the coverage

When is Franchise Insurance typically written?

When a group is too small to qualify for regular group coverage; typically done in business with the employer's consent.

Do group life insurance policies need to include a conversion provision? What does that mean?

Yes, meaning they must allow insured members to convert an individual plan without evidence of insurability

Are the premiums an employer pays for life insurance on their employees tax deductible? How?

Yes, they are tax deductible as a business expense