Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Specific to Life Insurance and AnnuitiesHard
A Florida business owner establishes a group life insurance plan for their employees. Which of the following statements is TRUE regarding the eligibility requirements for such a plan under Florida law?
- AThe plan must cover at least 75% of eligible employees if it is contributory.
- BEmployees must have worked for the company for a minimum of one year to be eligible.
- CAll employees must be full-time to be eligible for coverage.
- DThe employer must pay 100% of the premium for all employees.
Show answer & explanationAnswer & explanation
Correct answer: A. The plan must cover at least 75% of eligible employees if it is contributory.
Florida law, common across many states, requires a minimum participation rate for contributory group life plans (where employees pay part of the premium) to prevent adverse selection. This rate is typically 75% of eligible employees.
Why the other options are wrong
- B. Waiting periods are common, but Florida law does not mandate a one-year minimum for eligibility; shorter periods are often allowed.
- C. Eligibility can extend to part-time or specific employee classes, not strictly full-time.
- D. This describes a non-contributory plan, not a general requirement for all group life plans.
Group Life Eligibility (Contributory)
Rules determining which employees can join a group life plan where employees contribute to the premium, especially regarding participation rates.
- Minimum 75% participation for contributory plans.
- Prevents adverse selection.
- Employer pays part, employee pays part.
Memory trick: Contributory needs 75% 'yes' to cover the group.