UNIT 8

Question 1

EMPLOYER GROUP PLANS

Answer 1

a group insurance plan sponsored for employees

Question 2

MULTIPLE EMPLOYER TRUST (METs)

Answer 2

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.

Question 3

LABOR UNIONS

Answer 3

2 or more labor unions may join together to provide group insurance for their collective members. Labor union plans are sponsored under Taft-Hartley Trust.

Question 4

ASSOCIATION GROUP PLANS

Answer 4

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

Question 5

GROUP CREDIT LIFE INSURANCE

Answer 5

A lender, or creditor, may sponsor a group life insurance plan for its group off debtors.
-The amount of coverage is limited to the amount of the each insured’s individual debt.

Question 6

MASTER POLICY

Answer 6

Is issued to the sponsoring group and the applicant is policyowner or policyholder.

The individual employee or member is not a party to the group insurance contract. Instead of getting a copy of the master policy, they receive a certificate of insurance as evidence of their coverage under the master policy.

Question 7

CONTRIBUTORY GROUP PLAN

Answer 7

The employee pays part of the premium.

- At least 75% of eligible employees must participate

Question 8

NON-CONTRIBUTORY GROUP PLANS

Answer 8

The employer pays the entire premium on behalf of the employees.
-100% of eligible employees must participate.

Question 9

STABILITY OF THE GROUP

Answer 9

GROUP DOES NOT HAVE EXCESSIVE EMPLOYEE TURNOVER

Question 10

PERSISTENCY OF THE GROUP

Answer 10

GROUPS THAT CHANGE INSURERS EVERY YEAR MAY NOT REPRESENT A GOOD RISK

Question 11

EXISTENCE OF THE GROUP

Answer 11

INSURANCE PURCHASE MUST BE INCIDENTAL TO THE GROUPS FORMATION

Question 12

GROUP UNDERWRITING

Answer 12

• FOCUSES ON GROUP AS A WHOLE
• TYPICALLY NO MEDICAL QUESTIONS
• PREMIUMS BASED ON EXPERIENCE OF THE GROUP
• RENEWS ANNUALLY
• PREMIUMS FLUCTUATE YEAR TO YEAR

Question 13

PROBATIONARY PERIOD

Answer 13

requires new employees to wait for a certain period of time before they can enroll in the plan. During this time they are not covered by the group insurance plan. Can range from 1-12 months.

Question 14

ENROLLMENT PERIOD

Answer 14

To avoid adverse selection, eligible employees must sign up within 31 days after the probationary period ends. The employee can enroll without providing evidence of insurability; no medical questions or exams will be needed.

Question 15

CONVERSION PRIVILEGE

Answer 15

certificate holders and dependents must have the right to covert their group coverage to an individual policy if they lose their coverage. The following rules apply;

• the conversion must be done within 31 days from the date coverage lost
• must be converted to permanent insurance
• must provide the same coverage amount as the individual had under the group policy.
• the premium will be based on insured’s attained age at the time of conversion
• no proof of insurability is required