In a group life insurance plan, the contract that contains the actual terms of coverage is issued to the employer or trustee, while each covered employee receives a:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Group life insurance is built around a master contract issued to the policyowner, usually the employer or a trustee, which contains the full terms, conditions, and benefits. Each covered employee receives a certificate of insurance that summarizes the coverage, including the benefit amount, beneficiary designation, and conversion rights, but the master policy is the controlling document. Individual underwriting is typically not performed on each member. Employees are not parties to the master contract but have enforceable rights under it through their certificates.
Why the other options are wrong
- B) Only one master policy is issued; employees receive certificates, not individual policies.
- C) Life insurance does not use binders, and group members do not get individual binding receipts.
- D) A proxy statement is a corporate governance document, unrelated to group insurance certificates.
Memory hook
Group plan = one master policy at the top, a certificate summary in every employee's pocket.