8 - Group Life Insurance

Question 1

Group Life Insurance

What is the main rule & what are the different types?

Answer 1

• The group must have been formed for purpose other than obtaining insurance for its members
• Types
  
  • Single Employer Sponsored
  • Multiple Employer Trust (MET)
    
    • Trusts formed by small employers in the same industry
  • Labor Union
  • Professional or Trade Association
  • Group Credit Life
    
    • Lender automatically the beneficiary
    • Insurance cannot exceed the debt
  • Employer-Sponsored Group Life
    
    • Employer is the policy owner
    • Employe receives a certificate of insurance and also name a beneficiary

Question 2

Contributory Vs. Noncontributory Group Life

Answer 2

• Contributory
  
  • The employee pays part or all of the premium
  • 75% of eligible employees must enroll
• Noncontributory
  
  • Premium paid by the employer
  • 100% of eligible employees must enroll

Question 3

Probationary Period Group Life

Answer 3

Waiting period before eligibility begins

Question 4

Enrollment Period

What is it and how long does it last?

Answer 4

• Period following probationary period
• Typically 31 days

Question 5

Group Coverage

What are the 2 Common Formulas and how are they calculated?

Answer 5

1. Percentage or Multiples of Earnings
   
   • Coverage based on a few different calculations
   • 1/2 or 100% or earnings
   • A dollar amount based on years of service
2. Coverage Limit for Different Classes
   
   • Employees receive a certain amount
   • Supervisors a larger amount
   • Officers an even larger amount

Question 6

Conversion of Group Policies

What is this and how does it work.

Answer 6

• Employers must have the option to continue coverage or convert their coverage if they are terminated or the employer stops the plan
  
  • The conversion must happen within 31 days
  • Must be converted to a permanent policy (not term)
  • Cost based on current age
  • No medical questions
  • Death during conversion is covered