Arizona Life and Health Practice Exam

Which statement about group life insurance is incorrect?

1. Each participant requires evidence of insurability.

2. It offers coverage to a group under a single contract.

3. Premiums are typically lower than individual policies.

4. Coverage continues after employment ends in some cases.

The correct answer is: Each participant requires evidence of insurability.

Group life insurance is designed to provide coverage to a significant number of individuals under a single policy, often provided through an employer or another organized group. One of the key features of this type of insurance is that individual participants generally do not need to provide evidence of insurability when they enroll in the plan, especially if they apply within a specified enrollment period. This simplifies the process and makes it more accessible compared to individual life insurance policies, which typically require each applicant to prove their health status. The correct understanding of group life insurance highlights that it is intended to cover a group of individuals collectively and often allows for guaranteed issuance of coverage without the need for individual assessments of health, unlike what is suggested in the incorrect statement about needing evidence of insurability for each participant. Moreover, group life insurance often results in lower premiums than individual policies due to the spread of risk across a larger group and the lower administrative costs associated with managing one policy rather than many individual ones. It can also include provisions for continued coverage in certain situations, such as when an employee leaves a job, which is beneficial for individuals who may soon need to secure replacement coverage. Therefore, the assertion that each participant requires evidence of insurability does not align with the fundamental principles of