Group Life, Social Security, and Life Underwriting — Insurance Producer — Life & Health Practice Test
37 questions in this topic · 30 drawn at random this round
An employee's group life coverage ends because she leaves her employer. Under the group policy's conversion privilege, what is she generally entitled to do?
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This Insurance Producer — Life & Health Group Life, Social Security, and Life Underwriting practice set has 37 practice questions based on the official exam materials, each with an instant explanation.
Sample questions
Three questions from the Group Life, Social Security, and Life Underwriting bank with the correct answer and an explanation. The practice quiz above draws 30 questions at random from the same bank.
In group life insurance, the insurer issues one contract to the group sponsor and each covered member simply receives evidence of coverage. What are these two documents called?
- The insurer issues a master policy to the group policyholder (such as the employer), and each insured member receives a certificate of insurance. — Correct answer
- The insurer issues an individual policy to each member, and the employer receives a certificate summarizing the group.
- The insurer issues identical master policies to both the employer and every employee.
- The insurer issues a certificate of insurance to the employer and a master policy to each employee.
Explanation: Under group life insurance, the contract itself — the master policy — is between the insurer and the group policyholder (e.g., the employer or association sponsoring the plan). Individual members are not parties to that contract; each receives a certificate of insurance, which summarizes (but does not itself constitute) the coverage terms. This is a fundamental structural difference from individual insurance, where the insured directly owns a personal policy.
Handbook: Group Life, Social Security & Underwriting — Master Policy vs. Certificate of Insurance
Which of the following would most likely qualify as an eligible group for group life insurance underwriting purposes?
- An employer-employee group of sufficient size that was formed for a business purpose unrelated to obtaining insurance. — Correct answer
- A group of unrelated individuals who agree only to jointly purchase a life insurance policy to get a lower rate.
- A group formed exclusively for the purpose of qualifying for group insurance.
- Any two people who sign the same application form.
Explanation: Insurers require that an eligible group exist for some purpose other than obtaining insurance — such as an employer-employee relationship or a bona fide labor union or association — and generally that it have enough members and a natural flow of people in and out. This guards against adverse selection: a group assembled solely to buy insurance would likely be composed disproportionately of people who expect to need it, undermining the risk-spreading that makes group underwriting workable without individual medical underwriting.
Handbook: Group Life, Social Security & Underwriting — Eligible Groups
Under a contributory group life plan, where employees pay part of the premium through payroll deduction, what minimum percentage of eligible employees generally must enroll for the plan to be issued?
- 75% of eligible employees. — Correct answer
- 100% of eligible employees.
- 50% of eligible employees.
- There is no minimum participation requirement for contributory plans.
Explanation: Because employees share the premium cost in a contributory plan, some may decline to enroll. To prevent adverse selection — only less-healthy employees electing coverage — insurers typically require at least 75% of eligible employees to participate before issuing the master policy.
Handbook: Group Life, Social Security & Underwriting — Contributory Plans