In a group life insurance plan, which document does an individual covered employee typically receive?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In group life insurance, the employer or group sponsor holds the master policy issued by the insurer, and each covered employee receives a certificate of insurance that evidences and describes the employee's coverage. The certificate summarizes the benefits, terms, and conditions of coverage under the group plan and often notes the conversion privilege. The employee is not a direct party to the master contract and does not receive an individually underwritten policy. This master-policy-and-certificate structure is the fundamental distinction between group and individual insurance.
Why the other options are wrong
- B) The master policy is held by the group policyholder, usually the employer. Individual employees do not own or receive a copy of the master policy; they receive certificates of insurance.
- C) Group life does not use temporary binders. The employee’s coverage is evidenced by a certificate of insurance issued under the master policy.
- D) Coverage is provided under the group master policy. It is not provided through a separate individually issued and individually underwritten policy for each employee.
Memory hook
Group = one master contract, many certificates. Employer holds the big book; each worker holds a card.