Chapter 5: Group Life Insurance Flashcards
Group Life Insurance
Provides coverage for multiple people under one contract
Usually as renewable term insurance
No individual underwriting needed!
Contributory Plan
Employees share the cost
Noncontributory
Employer pays entire cost of the plan
Helps insurer avoid adverse selection
Group life insurance differences from individual (four)
- Does not have to provide evidence of insurability
- Individual does not own contract
- Fixed amount of coverage
- Employer chooses type of insurance (term or permanent)
Insurance Conversion
Allows employee to convert to individual plan (usually whole life)
Upon employment termination
Eligible groups
- organizations like credit untions, labor unions…
- Minimum number to be insured in one group (at least 3 employees)
Taxation of group insurance
Employers payments are tax deductible as a business expense
- Not deductible in key employee insurance, stock redemption or entity purchase agreement or split dollar insurance
Other types of group insurance
- Franchise life insurance
- group life
- Blanket (exposed to same hazard)
Association or labor group
A group that has a constitution or bylaws and has been organized for purposes other than obtaining insurance
How many days after termination can a group plan be converted?
31 days