Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
In a contributory group life insurance plan, which statement is true?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
In a contributory group life plan, employees pay a share of the premium through payroll deduction. Because participation is voluntary, the insurer typically requires that a minimum percentage of eligible employees enroll — commonly around 75 percent — so that the risk pool is broad enough to avoid adverse selection. Employees who delay enrollment beyond the initial period may be required to provide evidence of insurability. In a noncontributory plan, by contrast, the employer pays the entire cost and all eligible employees are automatically covered.
Why the other options are wrong
- A) Paying the entire premium with no participation requirement describes a noncontributory plan, not a contributory one.
- C) Late entrants in a contributory plan often must prove insurability; enrollment is not open at any time without evidence.
- D) Dependent coverage is optional and typically requires an additional contribution; it is not automatic and free.
Memory hook
When employees chip in, the insurer sets a minimum turnout.