Group Life Insurance Flashcards
These policies are issued to cover a group that may be exposed to the same risks, but the composition of the group (i.e., the individuals within the group) are continually changing. This health plan may be issued to an airline or a bus company to cover its passengers or to a school to cover its students. As compared to group insurance, no certificates of coverage are issued.
Blanket Health Policies
This is a group insurance plan that’s issued to an employer under which both the employer and employees contribute to the cost of the plan. Generally, 75% of the eligible employees must be insured in most states. The employees must contribute to the cost of the plan.
Contributory Plan
This is a document that’s issued by an insurance company/broker and used to verify the existence of insurance coverage granted to individuals under specific conditions. With group insurance, the group (typically the employer) is the policy owner and maintains a master policy. The insureds (typically the employees) receive it rather than a policy.
Certificate of Insurance
These policies are designed to help the insured pay off a loan in the event she’s disabled due to an accident or sickness, or she dies. If the insured becomes disabled, the policy provides for monthly benefit payments that are equal to the monthly loan payments due. If the insured dies, the policy will pay a lump-sum to the creditor to pay off the loan. They typically cannot exceed the amount of the loan since that’s the limit of the creditor’s insurable interest in the insured(s).
Credit Policies
Before an original insurance policy expires, this privilege allows a policy owner to elect to have a new policy issued which will continue the insurance coverage. It may be effected at attained age (premiums based on the age attained at the time of conversion) or at original age (premiums based on the age of the insured at the time of original issue). It is a common privilege for term life insurance and all group insurance. The insured is not required to prove insurability (good health) when converting a policy.
Conversion Privilege
This policy is issued to the employer under a group plan and contains all of the insuring clauses which define employee benefits. Individual employees who participate in the group plan receive individual certificates that outline the highlights of the coverage.
Master Policy
This is a life or health insurance plan for covering groups of persons with individual policies that are uniform in provisions, but perhaps different in benefits. Solicitation typically takes place in an employer’s business with the employer’s consent. It is generally written for groups that are too small to qualify for regular group coverage. This policy may be referred to as wholesale insurance when the policy is life insurance.
Franchise Insurance
As it pertains to insurance, it is the percentage of policies that an insurer has in force after a specified period. It is negatively impacted by policies that are replaced by other insurers, that are canceled by the policy owner, or that lapse due to non-payment. Companies with higher (blank) are more stable and profitable than those with lower (blank). In general, companies aim for 80% (blank) after three-years, and 60% (blank) after five years. This means that 60% of the policies that were written five years ago should still be active.
Persistency
This is an employee benefit plan under which the employer bears the full cost of the employees’ benefits. In most states, the plan must cover 100% of eligible employees. The employees do NOT contribute to the cost of the plan.
Non-Contributory Plan