Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Life InsuranceMedium
A Texas-based employer offers a non-contributory group life insurance plan to its employees. Which of the following is a characteristic of a non-contributory group life plan?
- AAll eligible employees must participate in the plan.
- BA minimum of 75% of eligible employees must enroll.
- CThe employer can choose which employees are covered.
- DEmployees pay a portion of the premium for their coverage.
Show answer & explanationAnswer & explanation
Correct answer: A. All eligible employees must participate in the plan.
In a non-contributory group life insurance plan, the employer pays 100% of the premiums. To avoid adverse selection, 100% of all eligible employees must participate in the plan.
Why the other options are wrong
- B. A 75% participation rate is typically required for contributory group plans, not non-contributory ones.
- C. Group plans are subject to eligibility rules, not arbitrary employer selection, to prevent discrimination.
- D. This describes a contributory plan, not a non-contributory one.
Non-Contributory Group Life Insurance
A type of group life insurance plan where the employer pays the entire premium, and all eligible employees must participate to prevent adverse selection.
- Employer pays 100% of premiums.
- 100% eligible employee participation required.
- Prevents adverse selection.
- Simplifies administration.
Memory trick: Non-contributory: No cost to you, everyone's in the crew.