In group life insurance, the contract of insurance is between the insurer and the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In group life insurance, the insurer issues one master contract to the master policyholder, typically the employer or association, and each covered employee receives a certificate of coverage summarizing the benefits. The employer holds the contract, pays premiums, and administers the plan; the certificate is evidence of coverage but is not the insurance contract itself. This two-tier structure, a master policy plus certificates, is the defining feature that distinguishes group insurance from individual policies. Understanding the master-contract structure is essential because individual employees have rights only through the employer's contract, and disputes are resolved against the terms of the master policy rather than the certificate.
Why the other options are wrong
- B) The individual employee is not a party to the master contract; the employee receives only a certificate and benefits under the master policy's terms. The employee's rights derive from the master contract, so the employee is not the contracting party.
- C) The insurance department regulates insurers and approves forms but is not a party to the group insurance contract. The regulator supervises the transaction but never becomes a party to the contract of insurance.
- D) Beneficiaries receive death proceeds but have no contract rights against the insurer beyond what the master policy provides. The beneficiary's right to benefits exists only through the master policy's terms.
Memory hook
Group insurance: one master contract at headquarters, certificates for the crowd.