Chapter 5: Group Life Insurance

Question 1

Group Life Insurance

Answer 1

Provides coverage for multiple people under one contract

Usually as renewable term insurance

No individual underwriting needed!

Question 2

Contributory Plan

Answer 2

Employees share the cost

Question 3

Noncontributory

Answer 3

Employer pays entire cost of the plan

Helps insurer avoid adverse selection

Question 4

Group life insurance differences from individual (four)

Answer 4

• Does not have to provide evidence of insurability
• Individual does not own contract
• Fixed amount of coverage
• Employer chooses type of insurance (term or permanent)

Question 5

Insurance Conversion

Answer 5

Allows employee to convert to individual plan (usually whole life)

Upon employment termination

Question 6

Eligible groups

Answer 6

• organizations like credit untions, labor unions…

- Minimum number to be insured in one group (at least 3 employees)

Question 7

Taxation of group insurance

Answer 7

Employers payments are tax deductible as a business expense

• Not deductible in key employee insurance, stock redemption or entity purchase agreement or split dollar insurance

Question 8

Other types of group insurance

Answer 8

• Franchise life insurance
• group life
• Blanket (exposed to same hazard)

Question 9

Association or labor group

Answer 9

A group that has a constitution or bylaws and has been organized for purposes other than obtaining insurance

Question 10

How many days after termination can a group plan be converted?

Answer 10

31 days