Group Life Insurance

Question 1

The general rule for eligibility to sponsor a group insurance plan is the group must

Answer 1

Have been formed for a purpose other than obtaining group insurance for its members

Question 2

Group insurance eligibility is limited to the following types of groups:

Answer 2

-single employer sponsored
-multiple employer trust (MET)
-labor unions
-association group plans
-group credits life insurance

Question 3

Employer Group Plans

Answer 3

A group insurance plan sponsored for employees

Question 4

A trust made up of multiple small employers in the same or similar industries that form to provide life insurance and other benefits for their employees while gaining tax benefits

Answer 4

Multiple Employer Trusts (MTEs)

Question 5

Two or more labor unions may join together to provide group insurance for their collective members. Sponsored under a _____-______ _____

Answer 5

Taft-Hartley trust

Question 6

Association group plans

Answer 6

A trade, professional, or other type of association may sponsor a group plan for its members

Question 7

Two features that separate group credit insurance from other plans

Answer 7

-group credit insurance can be made payable to the sponsoring group
-the amount of coverage is limited to each individual insured’s remaining debt balance

Question 8

One ______ _____ is issued to the sponsoring group and the applicant is the policyowner or policy holder. Could be an employer or the labor union

Answer 8

Master policy

Question 9

Individual employee or member is not a party to the group insurance contract and instead receives a

Answer 9

Certificate of insurance

Question 10

With a _____ employer group plan, the employee pays part of the premium

Answer 10

Contributory

Question 11

If the employer pays the entire group plan premium own behalf of the employees, the plan is _____________

Answer 11

Noncontributory

Question 12

At least __% of eligible employees must participate in a contributory plan

Answer 12

75%

Question 13

___% of eligible employees must participate in a noncontributory plan

Answer 13

100%

Question 14

Once the group life insurance plan is in force, premiums are based on..

Answer 14

…the experience of the group

Question 15

Group life insurance usually renews…

Answer 15

…annually, and premiums can fluctuate year to year

Question 16

Some underwriting considerations of group life insurance may include:

Answer 16

-stability of the group
-persistency of the group
-existence of the group

Question 17

Stability of the group

Answer 17

Group does not have excessive employee turnover

Question 18

Persistence of the group

Answer 18

Groups that change insurers every year may not represent a good risk

Question 19

Existence of the group

Answer 19

Insurance purchase must be incidental to the group’s formation

Question 20

Employers are allowed to determine which ______ of employees will be eligible for the plan

Answer 20

Classes

Question 21

Employers may classify employees. Using almost any standard. The two most common are:

Answer 21

-full-time versus part-time
-years of service

Question 22

Requires new employees to wait for a certain period of time before they can enroll in the plan. During this period they are not covered. Typically 1-12 months.

Answer 22

Probationary period

Question 23

To avoid adverse selection, eligible employees must sign up within ___ days after the probationary period ends, called the enrollment period

Answer 23

31

Question 24

If the employee declines coverage during the enrollment period and then decides later to enroll, the insurer may

Answer 24

Ask medical questions and require a medical exam

Question 25

A drawback of group life insurance is that certificate holders and dependents lose their coverage if:

Answer 25

-the certificate holder leaves the employer
-the employer discontinues the plan
-the insurer does not renew the policy

Question 26

Certificate holders and dependents must have the right to:

Answer 26

Convert their group coverage to an individual policy is they lose coverage

Question 27

The following group conversion rules apply:

Answer 27

-conversions must be done within 31 days from the date coverage is lost
-converted policy must be permanent insurance, not term
-converted policy must provide the same coverage as the individual had under the group policy
-premium will be based on the insured’s attained age at time of conversion
-no proof of insurability is required

Question 28

Credit group life insurance

Answer 28

-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

Question 29

Individual credit life insurance

Answer 29

-insured is usually policyowner
-assigned to lender
-death benefit can exceed the debt
-doesn’t stop when debt is paid
-can be more expensive than group
-usually requires medical questions