Group Life Insurance

Question 1

blanket health policies

Answer 1

issued to cover a group who may be exposed to the same risks, but individuals within the group are continually changing (i.e. passengers on a bus, members of a school…)

Question 2

certificate of insurance

Answer 2

a document issued by an insurance company that is used to verify the existence of insurance coverage granted to listed individuals (typically employees)

• the group is the policy owner and maintains the policy
• the insureds (employees) receive a certificate instead of a policy

Question 3

contributory plan

Answer 3

a group insurance plan issued to an employer under which both employer and employees contribute to the cost of the plan.
-generally 75% of eligible employees must be insured in most states and must contribute to the plan

Question 4

conversion privilege

Answer 4

allows a policy owner to elect to have a new policy issued that will continue the insurance coverage before the original plan expires.

• may be effected at attained age (age of insured at the time of conversion) or original age (age of insured at the time of original issue).
• does NOT have to prove insurability when converting

Question 5

credit policies

Answer 5

help insured pay off a loan in the event of a disability due to an accident or sickness or death. if disabled, this will make monthly payments of loan. if death, this will pay a lump sum to creditor

Question 6

franchise insurance

Answer 6

covering groups or persons with individual policies uniform in provisions, although different benefits. good for groups too small to qualify for reg group coverage

Question 7

master policy

Answer 7

issued to employer under a group plan, contains all insuring clauses defining employee benefits. certificates are given to outline coverage

Question 8

noncontributory plan

Answer 8

employee benefit plan in which employer bears the full cost of employee’s benefits; employees do NOT contribute to this plan

Question 9

persistency

Answer 9

percentage of policies an insurer has in force after a specified period of time. negatively impacted by:

• policies replaced by other insurers
• canceled policies by owner
• laps due to nonpayment
  (i. e. 60% of policies written 5 years ago should still be in place, this shows good persistency)