In a group life plan where employees share in the cost of premiums, the arrangement is described as what type?

Study for the Texas General Lines – Life, Accident, and Health Insurance exam. Engage with questions, hints, and explanations. Get exam ready!

Multiple Choice

In a group life plan where employees share in the cost of premiums, the arrangement is described as what type?

Explanation:
When employees share in the cost of premiums, the plan is contributory. In a group life insurance setup, this means part of the premium is paid by employees and part by the employer, rather than the employer paying everything. This distinguishes it from noncontributory, where the employer pays all premiums, and from an individual policy, which is not a group plan. Therefore, describing it as contributory group life insurance accurately captures both the funding arrangement and the group nature of the plan.

When employees share in the cost of premiums, the plan is contributory. In a group life insurance setup, this means part of the premium is paid by employees and part by the employer, rather than the employer paying everything. This distinguishes it from noncontributory, where the employer pays all premiums, and from an individual policy, which is not a group plan. Therefore, describing it as contributory group life insurance accurately captures both the funding arrangement and the group nature of the plan.

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