Life & Health Insurance Exam (National Portion)Life InsuranceEasy
An employer offers a group life insurance plan where employees contribute a portion of the premium through payroll deductions. This type of plan is known as:
- ANon-contributory
- BContributory
- CFully-funded
- DSelf-funded
Show answer & explanationAnswer & explanation
Correct answer: B. Contributory
A contributory group plan is one where both the employer and employees share the cost of the premiums. If employees pay any portion, it is considered contributory.
Why the other options are wrong
- A. A non-contributory plan means the employer pays 100% of the premiums.
- C. Fully-funded refers to how a plan's liabilities are covered, not how premiums are shared.
- D. Self-funded refers to an employer paying claims directly instead of through an insurer, not premium contributions.
Contributory Group Plan
A group insurance plan where both the employer and the employees share the cost of the premiums.
- Employees contribute a portion of the premium.
- Requires a higher percentage of employee participation (e.g., 75%).
- Contrasts with non-contributory plans where the employer pays 100%.
Memory trick: Contributory: Employees CONTRIBUTE to the cost.