Unit 8: Group Life Insurance

Question 1

types of eligible groups

Answer 1

must be formed for a purpose other than obtaining insurance for its members

single employer sponsored

multiple employer trust (MET)
-trust formed by a group of small employers in the same industry or similar industries

labor union
-Taft-Hartley trust

professional or trade association

group credit life

• lender is automatically the beneficiary
• insurance cannot exceed the debt

employee sponsored group life

• employer is the policy owner
• employee receives a certificate of insurance and also names the beneficiary

Question 2

contributory

Answer 2

employee pays part or all of the premium

75% of eligible employees must enroll

Question 3

noncontributory

Answer 3

premium paid by employer

100% of eligible employees must enroll

Question 4

group underwriting

Answer 4

underwriter underwrites the group not individual insurable

usually no medical questions or exams

Question 5

probationary period

Answer 5

waiting period before eligibility for insurance

ranges from 1 to 12 months

Question 6

enrollment period

Answer 6

follows probationary period-usually 31 days

no medical questions

Question 7

coverage amount

Answer 7

employer determines class (full time vs part time)

probationary period (waiting period before eligibility for insurance)

enrollment period (follows probationary period usually 31 days and no medical questions)

late enrollment (if allow-may require underwriting)

Question 8

conversion

Answer 8

termination of employment 
employer stops plan 
31 days:
-convert to an individual permanent policy
-cost based upon attained (current) age
-no medical questions
-death during conversion is covered

Question 9

credit life - group

Answer 9

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 10

credit life - individual

Answer 10

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

Question 11

group credit insurance

Answer 11

a from of insurance issued by insurance companies to creditors to cover the lives of debtors for the amounts of their loans