Group Life Insurance

Group insurance plans that require employees to pay a portion of the premium are called underwritten contributory participatory shared

contributory

When an employer pays the entire premium of a group plan, the plan is called Rebating Waiver of premium Contributory Noncontributory

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

In an employer group plan, what is the name of the policy issued to the employer? Certificate of insurance Certificate of authority Group contract Master contract

Master contract

An employee under a group insurance policy has the right to name a beneficiary and the right to remain on the group plan in the event of employment termination cash surrender the existing policy change the policy provisions convert to an individual policy in the event of employment termination

convert to an individual policy in the event of employment termination

The conversion privilege under a group life plan allows an employee to convert to a(n) family plan with another insurer individual plan with another insurer that has better rates individual plan upon employment termination individual policy in the spouse's name

individual plan upon employment termination

Which of these factors would an insurer consider when determining whether to accept a group life plan? Number of dependents Incontestable period Average age Grace period

Average age

What does the Group Life underwriting risk selection process help protect insurance companies from? Risk aversion Natural selection Adverse selection Risk management

Adverse selection

To what is a group life plan in which the employer pays the entire cost commonly referred? Contributory plan Noncontributory plan Group permanent plan Group paid-up plan

Noncontributory plan

If an employee wants to enter the group outside the open enrollment period, the insurer may Require evidence of insurability Require a higher premium Require an extended open enrollment period Require physical exams on existing members

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.)

Insurers require that a minimum number of trade association member employees participate in a group insurance plan in order to maximize premium income minimize adverse selection calculate valid loss ratios lower plan expenses

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

All of the following conditions are included in group credit life programs EXCEPT Premiums are usually paid by the borrower The amount of insurance per borrower is limited Benefits are paid to the borrower's beneficiary Benefits are paid to the creditor

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

All of the following statements pertaining to the conversion privilege of group term life insurance are correct EXCEPT An insured employee typically has 31 days following termination of employment in which to convert the group insurance. An insured employee must convert to the same type of coverage that was provided under the group plan (that is, term). Insureds who convert their coverage to individual plans pay a premium rate according to their attained age. An insured employee may exercise the conversion privilege regardless of that employee's insurability.

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.)

The type of insurance most frequently used in group life plans is annually renewable term. 10-year renewable term. limited pay whole life. single-premium whole life.

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.)

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? Coordination of benefits Conversion Extension of benefits Rollover

Conversion

What action may the insurer take on future policy anniversaries after a group life master policy has been issued? Cancel insurance on group members who become terminally ill Insurer can make no changes to policy Insurer can deny claims after a group has excessive claims Insurer can adjust premium

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.)

A group life insurance plan must insure all eligible employees if the Group was formed for the express purpose of obtaining insurance Employer pays the entire premium Employees are covered under a retirement plan Employer pays for a group health insurance plan

Employer pays the entire premium

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

certificate

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) policy receipt certificate of insurance application

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.)

In group life policies, individual certificates are given to Each policyholder Each insured Each applicant The insurance agent

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.)

All of the following are distinguishing characteristics of group life insurance EXCEPT Flow of insureds Group underwriting Master contract Individual policies

Individual policies

Which of the following makes a group life policy different from an individual life policy? Higher premium Higher underwriting costs Individual underwriting Lower premiums

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.)

Which of the following statements regarding group life insurance plans is CORRECT The employee is generally responsible for paying the entire premium. Group insurance, per unit of benefits, is available at rates lower than those for individuals. An employee may not continue the policy if he/she terminates employment. Group insurance plans are only available to key employees.

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.)

A method of marketing group benefits to employers who have a small number of employees is the MET Blanket Life Insurance ART Small Employer Trust

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).

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 school covering students, teachers, or employees. Members of a sports team while they are participating on the team. Religious organization covering its members while on a church sponsored trip. A start up company to cover the health insurance needs of its employees

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.)

What are blanket life policies? Policies that are mass-marketed Policies that cover everyone in a household Policies that are issued by the Guaranty Association covering multiple insurers Policies that cover a group of people exposed to a common hazard

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.)

Which of the following is NOT considered to be a group permanent plan? Group ordinary Group credit Group universal Group paid-up

Group credit

The insured is which one of these in group life insurance? Applicant Policyowner Beneficiary Certificate holder

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.)

Jackie has just signed up to participate in her employer's franchise life insurance program. Which of the following statements is CORRECT? She may not continue the policy if she terminates employment. As the "sponsor" of the program, her employer collects premiums from her and remits them to the insurance company. The employer is given a certificate of insurance. Jackie is allowed to select the type and amount of insurance coverage.

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.)

A non-contributory health insurance plan helps the insurer avoid adverse selection state compliance the underwriting process tax deductions

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

A type of group that has a constitution and bylaws and has been organized for purposes other than obtaining insurance is called a(n) employer group employee group association or labor group multiple coalition

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

If an employee in poor health is part of a large group that is acceptable for group life insurance, that employee is ineligible for coverage under the plan eligible for coverage, but on a rated basis eligible for the same type of coverage as other employees ineligible until good health is restored

eligible for the same type of coverage as other employees

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 Employee who works part time each week Employee who works less than 3 months a year Employee with less than 3 months of employment

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

The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? Certificate of Authority Consumer report Coverage document Certificate of coverage and benefits

Certificate of coverage and benefits

All of these are requirements of a group life plan EXCEPT A minimum number of participants are required The cost of the plan is dictated by average age of group Participants receive a certificate of coverage Participants are required to provide evidence of insurability

Participants are required to provide evidence of insurability

Converting a group plan to permanent life insurance involves submitting proof of insurability paying a lower premium converting to term life insurance the conversion being applied within 1 month of termination

the conversion being applied within 1 month of termination

If group life insurance premiums are paid totally by the employer, the minimum percent of eligible employees required to be covered is 25% 50% 75% 100%

100%

Most employers will establish benefit schedules according to all of the following EXCEPT Earnings Age Employment Positions Flat Benefit

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 about group life insurance for employees are true EXCEPT The policy is issued to the employer Evidence of insurability is normally required of each participant Premiums may be paid jointly by the employer and the employees Eligible groups may be required to meet minimum size standards

Evidence of insurability is normally required of each participant

Which of the following statements about the certificate of insurance is true? It is a binding contract between the employee and the insurer It serves as evidence of an employee's coverage It is issued to the employer It is used only when accidental death benefits are provided

It serves as evidence of an employee's coverage