Under a typical group life insurance plan, which responsibility belongs to the employer as policyholder?

Why A is correct

The employer-policyholder administers the plan: it determines eligible employee classes, enrolls members, collects contributions in contributory plans, and maintains the records the insurer needs. Group underwriting generally covers the whole group without individual medical underwriting, premium rates are set by the insurer based on group mortality and expense experience, and death claims are paid by the insurer rather than the employer. These administrative duties are the employer's side of the master contract. Recordkeeping failures can delay claims or complicate conversions, so the employer's duties are an important part of the group arrangement.

Why the other options are wrong

• B) Individual underwriting of each employee is not typical of group plans, which underwrite the group as a whole on the basis of its characteristics. These administrative duties make the employer the insurer's principal contact for running the plan.
• C) The insurer establishes premium rates from mortality tables and the group's loss experience. Group coverage is underwritten as a unit, and individual health conditions rarely block an eligible employee's enrollment under the plan.
• D) The insurer, not the employer, pays death claims under the master contract. The insurer prices the group from its mortality experience and administrative costs, subject to state filing requirements.

Memory hook

Employer runs enrollment and records; insurer runs underwriting, rates, and claim checks. Division of labor in group life.

Why A is correct

As the group policyholder, the employer is responsible for plan administration: selecting the eligible group in a nondiscriminatory manner, maintaining enrollment and payroll records, collecting employee premium contributions in a contributory plan, and managing the day-to-day administration. The insurer performs the underwriting and pricing functions, issues the master policy, and assumes the risk. The employer's administrative duties make the group plan workable at a low per-person cost, which is part of why group life insurance is less expensive than comparable individual coverage.

Why the other options are wrong

• B) Individual health underwriting of employees is the insurer’s function. In group insurance, the employer does not underwrite individual risks; the group is underwritten and coverage is offered to eligible classes.
• C) Guaranteeing insurer solvency is never an employer responsibility. Solvency protection comes from insurance regulation and the insurer’s own capital requirements.
• D) The insurer issues the master policy and sets the premium rates. The employer administers the plan as the group policyholder but does not perform the insurer’s pricing function.

Memory hook

Employer runs the group machine: pick the class, keep the books, collect the premiums. Insurer prices and pays.