Group Life Insurance Flashcards
In group life insurance, what is used to insure lives of several people?
Master policy
In group LI, policyholder chooses…
Baseline for the death benefit
Group members get a certificate of insurance and…
Might be able to increase the death benefit
Group members choose their own…
Beneficiaries and can’t be the employer
Premium might be paid by employer with or without…
Employee payroll deduction
Group LI has little to no medical underwriting but…
Possible age-based pricing
Group LI has potential cost savings for the insurer due to…
Low underwriting/admin costs
Group LI is often offered in…
Guaranteed renewable, 1 year terms
Insurer can rises prices but…
Cannot cancel based on increased risk
Insurer can require that at least…
A minimum number of employees participate
For non-contributory plans, participation must be…
Mandatory for all similarly situated employees
For contributory plans, participation must be…
Voluntary but often at least 75%
Group LI is often marketed to groups of…
10 or more
Participants must be what to enroll?
Actively at work- 30 hrs/wk, not on disability
Enrolling when hired or during annual open enrollment typically means…
No medical underwriting or exam
Some plans might offer higher or lower benefits to seniors or high-ranking employees but…
May have anti-discrimination laws and tax consequences
Group life death benefits are often…
Flat dollar amount or a multiple of someone’s salary
Death benefit coverage bought entirely by the employer is often capped at…
$50k for tax reasons
Group LI is term and usually…
Convertible, not portable
Employees who leave can convert to perm LI at…
Higher cost but regardless of health
Employees typically have how long to convert after leaving?
1 month
Is death during the conversion window covered?
Yes
Businesses can deduct LI premiums as business expenses if…
They aren’t the beneficiary
Group plans offering more than $50k of insurance might create…
Unintended tax consequences of employees
