Chapter 3 (Group Life Insurance)

Question 1

___________ is issued to the sponsoring organization, and covers the lives of more than one individual member of that group.

Answer 1

group life insurance

Question 2

Instead, each insured participant under the group plan is issued a _______________ evidencing that they have coverage. The actual policy, or master policy/contract, is issued to the sponsor of the group, which is often an employer. The group sponsor is the policyholder and is the one that exercises control over the policy.

Answer 2

certificate of insurance

Question 3

Purpose or nature of the group

Answer 3

The group must be created for a purpose other than to obtain group insurance.

Question 4

Size of the group

Answer 4

The larger the number of people in the group, the more accurate the projections of future loss experience will be. This is based on the Law of Large Numbers of similar risks.

Question 5

Turnover of the group

Answer 5

From the underwriting perspective, a group should have a steady turnover: younger, lower-risk employees enter the group, and older, higher-risk employees leave.

Question 6

Financial strength of the group

Answer 6

Because group insurance is costly to administer, the underwriter should consider whether or not the group has the financial resources to pay the policy premiums, and whether or not it will be able to renew the coverage.

Question 7

If an employee terminates membership in the insured group, the employee has the right to convert to an individual policy _________________ at a standard rate, based on the individual’s attained age.

Answer 7

without proving insurability

Question 8

When converting from group life to individual life insurance, evidence of insurability is___________

Answer 8

not required