Group Life and Concepts

Group Insurance – is the same products that we have studied with a different way of marketing.

Legally acceptable Groups or Organized Entities

Single Employer

Labor Union

Association with a minimum of at least 100 members

Credit union

Creditor – the organizing entity cannot be the beneficiary is the exception to the rule.

MET/MEWA

Multiple Employer Trust – (MET) or Multiple Employer Welfare Association (MEWA)- combines the employees of many employers to create a larger group.

Two forms:

Collection of money and pay claims for uninsured
Collection of money and buy coverage for insured

Group Policy (contract) – Organizing entity holds the Master Policy and individuals receive a certificate of Insurance.

Group Underwriting – Utilizes:

Experience Rating
Group Averages with gender, age, etc.

Group is less expensive because-

Reduced Adverse Selection:

Purpose of group cannot be to purchase cheap insurance

Set benefits schedule so insureds cannot pick and choose

Turnover rate – older or sick people retires or replace by younger and/or healthier employee

Eligible members

Noncontributory where the employee does not contribute means 100% participation
Contributory where the employee does contribute means 75% participation

Reduced Administrative Costs:

Reduced lapse rate or better persistency

Lower commission rates

Less stringent medical underwriting

New employees go through a probation period before being able to joining the group plan

Standard Provisions for Group Life and Heath Policies:

31 days grace period

2 years incontestable period

Misstatement of age – making sure it is correct

Group Life Products

Renewable Term – 95% of the group

Group Permanent

Group Annuities

Life Conversion Privilege – Maintains the status quo or the present benefit level

Gives members that are leaving or their dependents the right to convert to individual policies with the same amount of insurance needed to maintain the same level of coverage without having to prove insurability if:

The insured is terminated from his employment or if the dependent loses eligibility due to age or marriage.

The Conversion Period:

31 days to convert

15 extra days from whenever notified

Max to 60 days even if never notified

Note: Death during the conversion period is the same as death as a member of the group plan even if nothing has been done.

Note: COBRA applies to Group Health but not Group Life.

Group Life Dependent Coverage – is usually limited to 50% of the coverage written on the employee.

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