Group Life Insurance Quiz: MCQ!

Under a group insurance policy, an employee has the right to convert to an individual policy in the event of employment termination. This means that if the employee leaves their job or is terminated, they have the option to continue their insurance coverage by converting it into an individual policy. This allows them to maintain their insurance benefits even after leaving the group plan.

A Group Life Insurance Plan is a type of insurance that provides coverage to a group of people, typically employees of a company or members of an organization. It is designed to provide a collective coverage to a large number of individuals, which makes it cost-effective and convenient. The characteristics of a Group Life Insurance Plan include group underwriting, where the underwriting process is based on the overall risk profile of the group rather than individual assessments. It also involves a master contract, which outlines the terms and conditions of the insurance coverage for the entire group. Additionally, a probationary period may be included to determine the eligibility of new members. However, individual underwriting is not a characteristic of a Group Life Insurance Plan. This means that the insurance coverage is not based on the individual's health or risk profile, but rather on the collective risk of the group.

An association or labor group is a type of group that has a constitution and bylaws and is organized for purposes other than obtaining insurance. This type of group typically represents a specific industry or profession and works towards the common goals and interests of its members. They often engage in collective bargaining and advocacy efforts to protect the rights and welfare of their members.

The conversion privilege under a group life plan allows an employee to convert to an individual plan upon employment termination. This means that when the employee leaves the company, they have the option to continue their life insurance coverage by converting it to an individual plan. This allows them to maintain their coverage without interruption and ensures that they have the same level of protection as before.

To convert a group plan to permanent life insurance, it is necessary to apply for the conversion within 31 days of termination. This means that the policyholder must submit their application for conversion within this time frame in order to be eligible for the conversion. The other options mentioned in the question, such as submitting proof of insurability, paying a lower premium, or converting to term life insurance, are not requirements for the conversion process.

The correct answer is "Certificate of coverage and benefits." This document provides detailed information about the coverage, conditions, and limitations of a group contract's master policy. It outlines the specific benefits and services that are included in the policy and explains how they can be accessed by the members of the group. The certificate of coverage and benefits is an essential document for understanding the scope and terms of the insurance coverage provided under the group contract.

Under a group life policy, the insurer will issue an individual certificate to the policyowner for delivery to each person insured. This certificate serves as proof of coverage and outlines the terms and conditions of the policy. It provides important information such as the insured person's name, coverage amount, effective date, and beneficiary designation. The certificate is given to each insured individual to ensure they are aware of their coverage under the group life policy.

A non-contributory health insurance plan helps the insurer avoid adverse selection. Adverse selection refers to the situation where individuals with higher risks are more likely to seek insurance coverage. By offering a non-contributory plan, the insurer eliminates the need for individuals to pay premiums, which reduces the incentive for high-risk individuals to enroll. This helps the insurer balance the risk pool and prevent potential financial losses that could arise from insuring a disproportionately high number of high-risk individuals.

When determining whether to accept a group life plan, an insurer would consider the average age of the group. This is because the average age can provide insights into the overall health and mortality risk of the group. Younger individuals generally have lower mortality rates, making them less risky to insure. On the other hand, older individuals may have higher mortality rates and may be more likely to make claims, which can increase the insurer's risk. Therefore, the average age is an important factor in assessing the risk and determining the acceptability of a group life plan.

The Group Life underwriting risk selection process helps protect insurance companies from adverse selection. Adverse selection refers to the tendency of higher-risk individuals to be more likely to seek insurance coverage compared to lower-risk individuals. This can result in an imbalance of risk within the insurance pool, leading to higher costs for the insurance company. By implementing a thorough risk selection process, insurance companies can identify and mitigate the potential for adverse selection, ensuring a more balanced and sustainable risk pool.