Difficulty: Easy

Average Score: 91%

All of the following are true concerning group life policies EXCEPT

Rationale

The group must be formed for insurance purposes.

Group life insurance policies can be established for various purposes, including employee benefits or associations, and do not necessarily need to be created solely for the purpose of obtaining insurance. This flexibility allows groups to maintain their structure for reasons beyond just insurance coverage.

A (a master policy is issued to the company.) YOUR ANSWER

In group life insurance, a master policy is indeed issued to the employer or the organization that sponsors the group, providing a centralized coverage document. This characteristic is true and essential to the functioning of group insurance, as it outlines the terms and conditions of the coverage for all members.

B (individual insureds receive a certificate of insurance.) YOUR ANSWER

Each member of a group life insurance policy receives a certificate of insurance, which serves as proof of their individual coverage under the master policy. This statement is accurate, as it ensures that insured individuals have documentation of their benefits and coverage details.

C (the group must contain a specified number of members.) YOUR ANSWER

Group life insurance policies typically require a minimum number of members to be valid, ensuring that the risk is spread across a larger pool. This requirement is a standard practice in the insurance industry to maintain the viability and stability of group coverage.

D (the group must be formed for insurance purposes.) CORRECT

Groups can be formed for a variety of reasons and do not need to be specifically created to obtain insurance. Many organizations, such as employee groups or professional associations, exist independently of their insurance arrangements, making this statement false.

Conclusion

Understanding the nature of group life insurance policies reveals that while certain characteristics are true—such as the issuance of a master policy, the provision of certificates, and minimum member requirements—the assertion that groups must be formed solely for insurance purposes is inaccurate. This distinction highlights the versatility of group formations and their ability to serve multiple functions beyond insurance coverage.

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