Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly distinguishes contributory from noncontributory group life insurance?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In noncontributory group life insurance, the employer pays 100% of the premium and — to prevent adverse selection — all eligible employees must be covered. In contributory plans, employees share the premium cost, and a minimum participation percentage (commonly 75%) is usually required before the plan becomes effective. Contributory plans let employees elect or decline coverage, while noncontributory coverage is mandatory for eligible employees.
Why the other options are wrong
- B) It is the noncontributory plan, not the contributory plan, where the employer pays the entire cost.
- C) In noncontributory plans enrollment is mandatory for all eligible employees to avoid selection against the insurer.
- D) In a contributory plan the benefits are paid to the covered employees' beneficiaries, not to the employer.
Memory hook
Noncontributory = employer pays all, everyone is in. Contributory = employees chip in, so a minimum must join.