State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Under California Insurance Code Section 10270.5, an association may be issued a group disability policy only if the association:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Section 10270.5 requires that an association be organized and continuously maintained in good faith for purposes other than obtaining insurance before it can qualify for a group disability master policy. This bona fide purpose rule prevents groups from forming merely to buy cheaper insurance, which would invite adverse selection. Association policies must also offer coverage to all eligible members or a class of members, with participation and benefit plans designed to preclude individual selection.
Why the other options are wrong
- A) Forming the association specifically to obtain insurance disqualifies it; the group must exist for independent, non-insurance purposes.
- B) The association or trust type under Section 10270.5(a)(4) requires a minimum membership of 100 persons, not fewer.
- C) Membership is voluntary; requiring purchase of coverage as a condition of membership is not a requirement of the statute.
Memory hook
Bona fide first, insurance later. A group formed only to buy insurance cannot qualify.