Under California Insurance Code Section 10270.5, which of the following may be a policyholder of a group disability insurance master policy?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
CIC Section 10270.5 lists the permissible policyholders for group disability insurance: it may be issued to the federal or state government, any agency, political subdivision, district, public or municipal corporation, a corporation, partnership, or individual employer, or the trustee of an association of employers, covering employees under a plan that precludes individual selection of benefit amounts. Governmental entities are expressly eligible. Groups organized only to buy insurance do not qualify, and an individual cannot be a group policyholder. The section is foundational to the group market because it defines which entities may own the master contract. Beyond governments and public corporations, the statutory list reaches employer groups, unions, and trust arrangements, all of which must share a genuine relationship separate from the insurance itself.
Why the other options are wrong
- A) Group disability insurance is issued under a master policy to an eligible group or entity, never to a single individual consumer. Group coverage requires a defined group as policyholder, and an individual consumer acting alone cannot own a group disability master policy under Section 10270.5.
- B) A group formed solely to obtain insurance fails the statutory purpose test and is not an eligible group under Section 10270.5. An association formed solely to purchase insurance lacks the bona fide purpose that California law requires before a master policy may be issued.
- C) A hospital covering its patients individually would be issuing individual coverage, not a group disability policy under the statute. The statutory list of policyholders includes governments, employers, unions, and trusts, but not hospitals covering patients as a group, so this does not fit the section.
Memory hook
Group disability masters go to employers, governments, unions, and trusts, not to solo consumers.