Group Life Insurance Vocab & Notes Chap 6

Question 1

An employee benefit plan under which the employer bears the full cost of the employees’ benefits; in most states, the plan must insure 100% of eligible employees.

Answer 1

Noncontributory

Question 2

A group insurance plan 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.

Answer 2

Contributory

Question 3

A document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals. With group insurance, the group (typically employer) is the policy owner and maintains a master policy. The insureds (typically employees) receive a ___________________ in lieu of a policy.

Answer 3

Certificate of insurance

Question 4

This policy is issued to the employer under a group plan; contains all the insuring clauses defining employee benefits. Individual employees participating in the group plan receive individual certificates that outline highlights of the coverage.

Answer 4

A Master policy

Question 5

This allows a policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue). Conversion is a common privilege for term life insurance and all group insurance. The insured does not have to prove insurability (good health) when converting a policy.

Answer 5

Conversion Privilege

Question 6

A life or health insurance plan for covering groups of persons with individual policies uniform in provisions, although perhaps different in benefits. Solicitation usually takes place in an employer’s business with the employer’s consent. Generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance.

Answer 6

Franchise Insurance

Question 7

These policies are designed to help the insured pay off a loan in the event they are disabled due to an accident or sickness or in the event they die. If the insured becomes disabled, the policy provides for monthly benefit payments 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. ______________ typically cannot exceed the amount of the loan as that is the only amount the creditor has insurable interest in.

Answer 7

Credit Policies

Question 8

These policies are issued to cover a group who may be exposed to the same risks, but the composition of the group (the individuals within the group) are constantly changing. A _________________ plan may be issued to an airline or a bus company to cover its passengers or to a school to cover its students. No certificates of coverage are issued in a _______________ plan, as compared to group insurance.

Answer 8

Blanket Health Policies