Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Life InsuranceMedium
A Texas-based employer offers a group life insurance policy to its employees. The policy is non-contributory. Which of the following statements regarding employee participation and eligibility is true?
- AEmployees have the option to participate, but at least 50% must enroll.
- BAt least 75% of eligible employees must participate in the plan.
- COnly employees who pay a portion of the premium are required to participate.
- DAll eligible employees must participate in the plan.
Show answer & explanationAnswer & explanation
Correct answer: D. All eligible employees must participate in the plan.
For non-contributory group life insurance plans, the employer pays 100% of the premiums. To prevent adverse selection and ensure a broad risk pool, all eligible employees are required to participate.
Why the other options are wrong
- A. This statement describes a contributory plan, where employees have a choice and pay part of the premium, usually with a 75% participation requirement.
- B. This participation rate (75%) is typically required for contributory group plans, not non-contributory ones.
- C. This describes a contributory plan, where employee contribution is a factor, and participation is usually optional with a minimum percentage.
Non-Contributory Group Life (Texas)
A group life insurance plan where the employer pays 100% of the premiums. To avoid adverse selection, all eligible employees must participate.
- Employer pays 100% of premiums.
- 100% of eligible employees must participate.
- Helps prevent adverse selection.
- Simplifies administration.
Memory trick: No contribution, no choice, everyone's in the group's voice.