Chapter 6 Group Life Insurance

Question 1

Basic Principle of group insurance

Answer 1

provide coverage for a group of people under 1 contract. (master contract or master policy). employees receive a “certificate of coverage”

Question 2

Experience Rating

Answer 2

relies on groups track record of past claims to determine premiums

Question 3

Under a group policy the group as a whole must qualify for coverage, not each individual. who is the policy owner?

Answer 3

The employer.

they can also determine amount of coverage to be offered and require a certain amount of employee participation before issuing coverage.

Question 4

Contributory Group Life Insurance

Answer 4

plans in which the employee contributes a portion of premium and employer pays the rest.

Question 5

Non-Contributory Group Life Insurance

Answer 5

Employer pays the entire premium, employee pays no portion.

Question 6

Insurable Groups typically fall into the following categories

Answer 6

• Single employer
• multiple employer
• labor unions
• trade associations
• creditor/debtor groups
• Fraternal organizations

Question 7

2 types of insurance plans for Group Life Programs

Answer 7

1. Term Life (least expensive)

2. Whole Life

Question 8

Group Term Life Insurance

Answer 8

Least expensive group life coverage.

premiums at renewal are based on entire groups loss experience during previous year.

Question 9

Group Whole Life Insurance ( 3 offering types)

Answer 9

1. Group ordinary plans
2. Group paid-up plans
3. group universal life plans

Question 10

Exceptions to Master Policy Theme

Answer 10

• Franchise Life Insurance
• Blanket Life Insurance
• Credit Life Insurance

Question 11

Franchise Life Insurance

Answer 11

Individually owned policies for small groups

Question 12

Blanket Life Insurance

Answer 12

Temporary coverage for a specific hazard for a specific group.

ex. flights, sports teams, etc

Question 13

Credit Life Insurance

Answer 13

relationship between debtor groups and creditor groups

ex. policy will pay creditor

Question 14

Multiple Employer Trust (MET)

Answer 14

Popular method of marketing group benefits to employers who have a small number of employees.

Question 15

Multiple Employer Welfare Agreement (MEWA)

Answer 15

provides insurance for unions and self funded and tax exempt. employees are required by law to have an employment related bond

Question 16

All Group Life Insurances must be convertible…what are the details

Answer 16

31 day conversion period

any death within conversion period is covered.

Question 17

Annually Renewable Term (ART)

Answer 17

coverage for 1 year and allows for renewal each year without evidence of insurability

Question 18

Enrollment Period

Answer 18

period where new employees can sign up for coverage.

Question 19

Master Policy

Answer 19

issued to employer under group plan. contains all clauses and benefits.

Question 20

Group Ordinary

Answer 20

provides coverage for a group of people, usually employees under 1 master contract.

Question 21

Probationary Period

Answer 21

specified # of days after policy issue date during which coverage is not afforded for sickness.