Master Policy

In a group life insurance arrangement, the employer receives the ______ and each covered employee receives a ______.

1. A.Certificate; master policyIt is reversed: the employer holds the master policy, not the certificate.
2. B.Master policy; certificate of insuranceCorrect — the employer holds the master policy and employees get certificates.
3. C.Individual policy; riderGroup life uses a master policy and certificates, not individual policies with riders.
4. D.Prospectus; buyer's guideThose documents are unrelated to the master-policy/certificate structure of group life.

Why: The employer (or other sponsor) holds the master policy, while each covered employee receives a certificate of insurance evidencing their coverage under that master policy.

Under a group life insurance certificate, who selects the beneficiary, and who is generally barred from being named?

1. A.The insurer designates the employee's estate unless the employer objectsThe insurer never selects beneficiaries; the estate is only a fallback if the employee names no one.
2. B.The employer names beneficiaries because it owns the master policyMaster-policy ownership covers plan administration, not beneficiary rights - those belong to each employee.
3. C.The covered employee names the beneficiary, and the employer generally cannot be namedCorrect. Beneficiary designation is the employee's right, and the employer is barred from taking the proceeds of basic group coverage.
4. D.The employee names the beneficiary, but only a spouse may be chosenEmployees may generally name whomever they wish - there is no spouse-only restriction.

Why: Each covered employee names his or her own beneficiary, even though the employer owns the master policy. State law generally prohibits the employer from being the beneficiary of employees' group life coverage - the benefit must go where the employee directs.

In a group life insurance arrangement, who receives the master policy and what do covered employees receive?

1. A.The state insurance department holds the master policyWrong. Regulators approve forms; they are not policyholders.
2. B.The employer holds the master policy; employees receive certificates of insuranceCorrect. That is the defining structure of group insurance.
3. C.The insurer retains all documents and issues nothing to employeesWrong. Employees must receive certificates evidencing their coverage.
4. D.Each employee holds an individual master policyWrong. There is one master policy, held by the sponsor.

Why: The employer or sponsoring entity is the policyholder and holds the master policy; each insured employee receives a certificate of insurance summarizing coverage. Citation: standard group life structure under state insurance codes. Takeaway: master policy to the sponsor, certificates to the members.

XYZ Corp terminates its group life master policy entirely. Regarding the covered employees' conversion rights:

1. A.Employees insured under the plan for at least five years may generally convert, often subject to a coverage capCorrect. On master-policy termination, conversion typically extends only to longer-tenured insureds and may be limited in amount.
2. B.No employee may convert because the employer, not the employee, ended the coverageConversion rights survive plan termination for qualifying employees - who canceled the plan does not extinguish them.
3. C.Every employee may convert their full coverage amount regardless of time insuredThis ignores both the service requirement and the typical cap that distinguish plan termination from individual termination.
4. D.Conversion is available only if the insurer consents in writingConversion is a right, not a favor - insurer consent is not a condition.

Why: When the master policy itself terminates, conversion is not unlimited: employees who have been insured under the plan for a substantial period (typically at least five years) generally retain a conversion right, often capped at a limited amount of coverage.