In group life insurance, which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Group life insurance is issued to a policyholder — typically the employer — who holds the master contract stating the terms of the plan, while each covered employee receives a certificate of coverage summarizing the insured's benefits, rights, and beneficiary designation. The certificate is not a separate contract but evidence of coverage under the master policy. Because there is one master contract for a large group, this structure is far less expensive to administer than individual policies. The employer holds the master contract; employees hold certificates, and documentation is always required.
Why the other options are wrong
- B) The structure is the reverse: the employer holds the master contract, and each covered employee receives a certificate, not an individual policy.
- C) The master contract is held by the group policyholder, typically the employer, not distributed to or held by the individual employees.
- D) Documentation is required. The master contract governs the plan, and certificates are issued to covered employees as evidence of coverage.
Memory hook
Master contract on the shelf, certificate in the employee's hand — one plan, many cards.