State RegulationsNJ specificDifficulty 3/5
A covered member of a group life plan dies, and a dispute arises over who controls the beneficiary designation. Which allocation of rights is correct under group life concepts?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Group life coverage is individually directed even though the contract sits with the policyholder: each covered member designates a beneficiary for the member's own share of coverage, and the policyholder administering the master policy must honor that designation. The employer or association holds the contract and pays the plan, but it holds no ownership of the member's death benefit and cannot redirect the proceeds. The New Jersey group life sections (N.J.S.A. 17B:27-68 through 17B:27-75) frame this member-level right within the policyholder-level contract.
Why the other options are wrong
- A) The policyholder administers the plan but does not own the members' benefits and cannot reassign their proceeds.
- B) Beneficiary selection belongs to the covered member; the insurer pays whom the member named, subject to the plan's terms.
- D) Designations are made and changed by each member during coverage, not frozen by the employer when the plan is created.
Memory hook
The member names the payee; the employer just holds the paperwork.