Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under a noncontributory group life insurance plan, which of the following participation rules generally applies?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In a noncontributory plan, the employer pays the full cost of the coverage, so the law requires that all eligible employees be covered. This avoids adverse selection, since no employee could decline coverage and later join only when a health problem appears. In a contributory plan, by contrast, employees share the premium, which is why those plans require a minimum participation level, typically at least 75 percent of eligible employees, before coverage takes effect.
Why the other options are wrong
- B) A 30-day enrollment window describes open enrollment timing in some contributory plans, not a participation rule for noncontributory plans.
- C) A minimum participation percentage is a feature of contributory plans, where employees pay part of the cost.
- D) Group insurance must be issued on an eligibility-class basis, and noncontributory plans cannot let the employer cherry-pick who is covered.
Memory hook
Company pays all, everyone eligible is in. When employees chip in, the plan needs a crowd before it starts.