Group Life Insurance Plans

Insurance Policy

vs.

Master Contract

vs.

Certificate of Insurance

- In individual life insurance, policy owner receives an insurance policy and exercises all ownership and control . . . versus . . .

- A group life policy (master contract) is owned and controlled by employer (master policy owner) who is responsible for applying for group insurance coverage and paying premiums

- Covered employees under group plan are issued a Certificate of Insurance as evidence of their coverage.

What must be included on

Certificate of Insurance

for a GROUP life policy?

1) Policy number

2) Name of insurance company

3) Insured employee's name

4) Coverage amount

5) Beneficiary name

6) Principal exclusions

(Note: Premium NOT on Certificate of Insurance)

Individual vs. Group -

Medical Exam Requirements

Individual - E of I generally required (e.g. medical exam, application, etc.)

Group - E of I generally NOT required during open enrollment

Group Insurance -

Contributory

vs.

Non-contributory

Contributory - Employee pays all or part of the premium. At least 75% of eligible employees must participate.

Noncontributory - Employer pays entire premium - employee pays nothing. 100% of eligible employees must be covered.

Group Life -

Definition of "Group"

For group life insurance purposes a group is 2 or more public or private employees.

Group Life -

Dependents of Insured Employees

“Dependent” includes the member’s:

> Spouse

> Minor child

> Child up to a maximum of 26 years of age

> Any child over the age of majority who is both incapable of self-sustaining employment by reason of an intellectual disability or physical handicap AND chiefly dependent upon the employee for support and maintenance.

Group Life -

Domestic Partnership

Every group life policy issued, amended, delivered, or renewed in California shall provide coverage for the registered domestic partner of an insured or policyholder that is equal to, and subject to the same terms and conditions as, the coverage provided to a spouse of an insured or policyholder.

Group Life -

Incontestability

Group life policies must have a 2-year incontestability period.

Group Life -

Misstatement of Age

Group life policies may contain a misstatement of age provision which allows for the adjustment of the premium or the amount of insurance payable in the event of a misstatement of the age of an insured employee.

Group Life -

Exclusions

Group life policies may provide that the insurer is not liable, or is liable only in a reduced amount, for losses arising from conditions relating to:

- War or act of war

- Military or naval service

- Aviation

Group Life -

Conversion Privilege

Group life policies must contain a conversion privilege that allows an employee who terminates his employment for any reason to convert his group life insurance to an individual life policy without E of I for at least as much coverage as he had under the group plan.

Employee must apply for conversion to individual policy within 31 days following his termination.

Group Life -

Conversion "Grace Period"

If employee covered under a group life policy dies during the 31-day conversion period following termination a DEATH BENEFIT WILL BE PAID under the group policy whether or not application for the individual policy has been made

Group Life -

Discontinuance

Employees who become totally disabled while insured under a group life policy AND who continue to be totally disabled on the date the policy is discontinued, must have the same conversion privilege as a terminating employee

Blanket Life Insurance

A form of group life insurance in which the insureds are automatically covered without having to apply for or enroll for the coverage.

Third Party Administrator

(TPA)

A person or organization that specializes in handling the documentation and recordkeeping involved for a self-insured group plan, including collecting premiums and processing and paying claims.

> TPA must have a certificate to perform duties.

Voluntary Group Life Insurance

Optional group life insurance that can be purchased by employee under an employer's group life insurance plan that is over and above standard limit provided by employer.