Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In a group life insurance plan, each covered employee receives a certificate of coverage. Which of the following best describes the legal effect of that certificate?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In group life insurance, the master policy is the single contract between the insurer and the group policyholder, usually the employer. Each covered employee receives a certificate that summarizes the benefits, beneficiary designation, and conversion rights; the certificate is evidence of coverage, not a contract, and the employee is not a party to the master contract. The employer holds the contract and administers the plan, while the certificate simply documents the benefits to which the employee is entitled.
Why the other options are wrong
- B) Only the master policy is the insurance contract; the certificate merely evidences the employee's rights under the contract held by the employer.
- C) On leaving the group the employee may exercise conversion rights described in the certificate, but the certificate itself does not become a replacement individual policy at retirement.
- D) A binder is an individual-insurance concept for coverage pending underwriting; a group certificate evidences coverage already in force under the master policy.
Memory hook
Master policy = the constitution. Certificate = the summary card each employee carries.