Chapter 6 Group Life Insurance Flashcards
Basic Principle of group insurance
provide coverage for a group of people under 1 contract. (master contract or master policy). employees receive a “certificate of coverage”
Experience Rating
relies on groups track record of past claims to determine premiums
Under a group policy the group as a whole must qualify for coverage, not each individual. who is the policy owner?
The employer.
they can also determine amount of coverage to be offered and require a certain amount of employee participation before issuing coverage.
Contributory Group Life Insurance
plans in which the employee contributes a portion of premium and employer pays the rest.
Non-Contributory Group Life Insurance
Employer pays the entire premium, employee pays no portion.
Insurable Groups typically fall into the following categories
- Single employer
- multiple employer
- labor unions
- trade associations
- creditor/debtor groups
- Fraternal organizations
2 types of insurance plans for Group Life Programs
- Term Life (least expensive)
2. Whole Life
Group Term Life Insurance
Least expensive group life coverage.
premiums at renewal are based on entire groups loss experience during previous year.
Group Whole Life Insurance ( 3 offering types)
- Group ordinary plans
- Group paid-up plans
- group universal life plans
Exceptions to Master Policy Theme
- Franchise Life Insurance
- Blanket Life Insurance
- Credit Life Insurance
Franchise Life Insurance
Individually owned policies for small groups
Blanket Life Insurance
Temporary coverage for a specific hazard for a specific group.
ex. flights, sports teams, etc
Credit Life Insurance
relationship between debtor groups and creditor groups
ex. policy will pay creditor
Multiple Employer Trust (MET)
Popular method of marketing group benefits to employers who have a small number of employees.
Multiple Employer Welfare Agreement (MEWA)
provides insurance for unions and self funded and tax exempt. employees are required by law to have an employment related bond