Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Life InsuranceMedium
A group life insurance policy issued in Texas designates the employer as the policyowner and the employees as the certificate holders. Which of the following statements accurately describes the rights of an individual certificate holder under a typical group life insurance arrangement?
- AThe certificate holder has the right to borrow against the cash value of their coverage.
- BThe certificate holder has the right to assign their coverage to another individual.
- CThe certificate holder has the right to modify the terms and conditions of the group policy.
- DThe certificate holder has the right to change the beneficiary of their individual coverage.
Show answer & explanationAnswer & explanation
Correct answer: D. The certificate holder has the right to change the beneficiary of their individual coverage.
While the employer owns the master policy in group life insurance, individual employees (certificate holders) typically retain the right to name and change their own beneficiaries. They do not have rights to assign coverage, borrow cash value (as group term life usually has none), or modify the master policy.
Why the other options are wrong
- A. Group term life insurance, which is most common, does not accumulate cash value.
- B. Assignment of group coverage is generally not permitted or is highly restricted.
- C. Only the policyowner (the employer) can modify the master group policy terms with the insurer.
Group Life Certificate Holder Rights
Under a group life insurance policy, individual employees (certificate holders) have specific rights, primarily the ability to name and change their beneficiaries, while the employer (policyowner) controls the master policy.
- Can name/change beneficiary.
- Does not own the master policy.
- Usually no cash value in group term life.
- Cannot modify policy terms.
Memory trick: Group policy: Employer holds the book, employee picks the look.