CLU Group Benefits and Employee Insurance

Question 1

Under a contributory group life insurance plan, what is the minimum employee participation requirement typically required by insurers?

Accepted Answer

75%

Answer

Most insurers require at least 75% of eligible employees to participate in a contributory group life insurance plan to prevent adverse selection.

Question 2

Which provision in a group life insurance policy allows employees to convert their coverage to an individual policy without evidence of insurability when they leave employment?

Accepted Answer

Conversion privilege

Answer

The conversion privilege allows a departing employee to convert group coverage to an individual permanent policy within 31 days without proving insurability.

Question 3

A Section 79 plan governs the tax treatment of employer-provided group term life insurance. What is the monthly cost per $1,000 of coverage above $50,000 taxable to the employee?

Accepted Answer

IRS Table I rates

Answer

IRC Section 79 requires employees to include the cost of group term life coverage exceeding $50,000 in gross income, calculated using IRS Table I uniform premium rates.

Question 4

What is the primary purpose of a Multiple Employer Welfare Arrangement (MEWA)?

Accepted Answer

To allow small employers to pool together to purchase employee benefits

Answer

MEWAs enable small employers to join together as a purchasing pool to obtain group benefits at rates comparable to larger employers.

Question 5

Under ERISA, what is the primary fiduciary duty of a plan administrator for a group life insurance plan?

Accepted Answer

Act solely in the interest of plan participants and beneficiaries

Answer

ERISA requires plan fiduciaries to act solely in the interest of plan participants and beneficiaries with the exclusive purpose of providing benefits.

CLU - Chartered Life Underwriter Practice Test

CLU - Chartered Life Underwriter Practice Test

CLU Group Benefits and Employee Insurance