Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In a contributory group life insurance plan, the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In a contributory group plan, employees share in the premium cost, with the employer paying part and covered employees contributing the rest. Because employee contributions make enrollment optional, insurers typically require that a minimum percentage of eligible employees participate to avoid adverse selection. In a noncontributory plan, the employer pays 100% of the premium and all eligible employees must be covered. Participation requirements protect the group's risk pool.
Why the other options are wrong
- B) Full employer payment describes a noncontributory plan, not a contributory one.
- C) An employee-pays-all arrangement is not a standard group structure; insurers generally require employer involvement.
- D) The insurer does not fund its own premiums from investment earnings.
Memory hook
Contributory = employees chip in, so a minimum participation is required; noncontributory = employer pays all.