13.2a Flashcards
Group life insurance is also characterized by ______. Groups eligible for life insurance are commonly employment related, non-employment related, customer related or credit related.
the type of group for which the insurance is being purchased
Group insurance is most commonly provided through an employer as a benefit of employment. As the master policyowner, the employer decides on the type and amount of life insurance it will provide to its employees, again, typically based on tenure, job description or salary. The most common type of employment-related group life insurance, known as ______, provides life insurance on a one-year term basis that is most often renewable without proof of insurability and allows the insurer to adjust annual premiums based on the experience of the group.
Annual Renewable Term (ART)
In addition to an ART policy, a group sponsor can establish ______, or a combination of both permanent and term life for various reasons including funding employee pensions or as a benefit for top-tiered employees or company executives. Group Paid-Up Life involves a combination of both term and whole life policies where the employer pays for the term portion and the employee pays the whole life portion. Contributions are not taxable income to the employee and are ______ for the employer. In the event of termination or retirement, the employee is granted the paid-up portion, or cash value of the policy.
permanent life insurance
tax-deductible business expenses
An Individual Employer Plan is established by a single employer to provide insurance coverage for its employees. Plans are either fully insured by an insurer or partially insured by insurer, meaning that the employer ______ before the insurer begins to cover any loss.
assumes some risk
A ______ is established by two or more similar employers within a related industry, but who are not part of a collective bargaining agreement. The purpose of a multiple employer plan is to ______. Although multiple employer plans are purchased by related employers within the same or similar industry, they are not related in the sense that they do not share a collective bargaining agreement, nor are they members of the same association or union and are not taxed as a single employer.
Multiple Employer Plan
provide smaller employers, who are related based on the type of business or industry, with the opportunity to group together in purchasing life insurance to increase the size of the group in order to provide life insurance for employees at a more affordable rate.
