Group Life Insurance Flashcards
Group life insurance
Provides coverage for many lives using one contract. Group insurance premiums are less expensive than an individual policy
Group must be formed for some other purpose than to get group insurance rate
Employer Group Plan
A group insurance plan sponsored for employees is sometimes referred to as employee group plans
Multiple Employer Trusts (MET)
A trust made up of multiple small employers in the same or similar industries that form to provide life insurance or other benefits for their employees while gaining tax benefits
Labor Union
Two or more labor unions may join together to provide group insurance for their collective members. Labor Union plans are sponsored under a taft-Hartley trust
Association group plans
A trade, Professional, or other type of Association may sponsor a group plan for its members
Group credit life insurance
A lender, creditor, may sponsor a group life insurance plan for its group of debtors. Two features that separate group credit insurance from other plans:
Group credit insurance can be made payable to the sponsoring group
The amount of coverage is limited to the amount of the each insured’s debt level
Contributory group plan
Employee pays part of premium
75% of eligible employees must enroll
Noncontributory
Premium paid by employee
100% of eligible employees must enroll
Group underwriting
Underwriter underwrites the group, not individual insureds (stability of group, persistency of group, existence of group)
Usually no medical questions or exams
Probationary period
Waiting period before eligibility for insurance
Enrollment period
Follows probationary period (usually 31 days)
No medical questions
Conversion privilege
Termination of employment
Employer stops plan
31 day conversion period
- Convert to individual permanent policy
- No Medical Questions
- Death during conversion is covered
Group credit life insurance plan
Sponsored by lender Lender is beneficiary Usually no medical questions Cheaper than individual policy Insurance no greater than debt owed Stops if debt is paid
Individual credit life insurance plan
Insured is usually policy owner Assigned to lender Death benefit can exceed debt Doesn’t stop when debt is paid Can be more expensive than group Usually requires medical questions
