Participating, individual, and group life policies

Correct answer: Eligibility to share in divisible surplus through declared dividends

Participation refers to eligibility for policy dividends from divisible surplus, not group enrollment or premium funding.

Correct answer: The illustrated dividend is not a guaranteed future payment.

An illustrated dividend is not a contractual guarantee, regardless of the selected dividend option.

Correct answer: The sponsoring employer

The employer sponsors the group arrangement and holds the master policy; employees receive certificates describing coverage.

Correct answer: Contributory

Employee contributions toward group premiums make the arrangement contributory.

Correct answer: Buying additional permanent insurance requiring no further premiums on the addition

Paid-up additions use dividends to buy additional permanent insurance with cash value and no future premium requirement for the additions.

Correct answer: 31 days

Section 10209(a)(2) specifies application and premium payment within 31 days after employment termination.

Correct answer: Individual and participating

Individual describes issuance, while participating describes dividend eligibility, so the labels can coexist.

Correct answer: Accumulation at interest

Accumulation at interest leaves dividends with the insurer in an interest-earning accumulation.

Correct answer: Mortality and expenses more favorable than assumed, along with favorable investment earnings

Favorable mortality, expense, and investment experience can contribute to divisible surplus.

Correct answer: The owner and insured may be different people.

Individual insurance does not require the owner and insured to be the same person.

Correct answer: Permit conversion without evidence of insurability under the statutory right.

Section 10209(a)(2) applies when employment terminates for any reason and permits timely conversion without evidence of insurability.

Correct answer: Dividend eligibility differs, but future dividends do not establish a guaranteed cost advantage.

Participation changes dividend eligibility; it does not guarantee a lower cost or determine the duration of coverage.

Correct answer: Premium reduction

Premium reduction applies a dividend toward a premium due on the policy.

Correct answer: The insurance protection and to whom it is payable

Section 10209(a)(1) requires a statement of the employee's insurance protection and to whom it is payable.

Correct answer: $96,000

Two times $48,000 equals $96,000 under the stated group benefit formula.

Correct answer: The additions are paid up; the original policy retains its own premium requirements.

Paid-up applies to the insurance purchased by the dividend, not to the original policy's remaining premium obligations.

Correct answer: It does not provide participation in divisible surplus through policy dividends.

Nonparticipating describes the absence of policy dividend participation, not funding, issuance, or duration.

Correct answer: Noncontributory

The basic coverage is noncontributory because the employer funds its entire premium.

Correct answer: Term life insurance

The statute permits conversion to forms customarily issued by the insurer other than term insurance.

Correct answer: Portability

Portability continues group coverage when available; conversion results in an individual policy.

Correct answer: Limited underwriting for basic coverage can coexist with evidence requirements for additional amounts.

Group coverage can limit individual underwriting for basic benefits while requiring evidence for higher amounts.

Correct answer: One-year term insurance

The one-year term option uses a dividend to purchase temporary life protection for one year.

Correct answer: 46, the employee's attained age at conversion

Section 10209(a)(2) uses the employee's then attained age, along with risk class and the policy form and amount.

Correct answer: The certificate describes that employee's protection under the group policy.

An individual certificate documents a member's coverage within a group arrangement; it is not a separate individual contract.

Correct answer: Cash

The cash option pays the dividend directly to the policyowner.

Correct answer: $80,000, equal to the group protection at termination

Section 10209(a)(3) specifies an amount equal to the employee's group protection at termination.

Correct answer: The convertible amount as a claim under the group policy

Section 10209(a)(4) pays the convertible amount under the group policy for death within the 31-day period before the individual policy is effective, regardless of application or first premium.

Correct answer: Call the funding contributory; determine dividend participation from the policy terms.

Employee premium contributions establish contributory funding, not dividend participation or individual issuance.

Correct answer: Its contractual dividend-participation provisions

Participation is determined by the policy's dividend provisions, not payment method, ownership roles, or benefit formula.

Correct answer: Late enrollment can require individual health evidence within a group plan.

Group coverage may require evidence of insurability for late enrollment even when normal basic enrollment uses limited individual underwriting.

Correct answer: Incorrect; mutual insurers commonly issue participating policies, but illustrated dividends remain nonguaranteed.

Mutual insurers commonly issue participating policies, but neither mutual structure nor a dividend election guarantees projected dividends.

Correct answer: The first purchases permanent insurance; the second leaves dividend funds to earn interest.

Paid-up additions purchase permanent coverage, while accumulation at interest retains an interest-earning dividend balance.

Correct answer: A policy issued to its owner and tailored to personal needs, subject to underwriting

Individual life insurance is issued to its policyowner; personal needs and underwriting shape the contract rather than membership under a group master policy.

Correct answer: $950

The declared dividend reduces the amount the owner supplies: $1,200 minus $250 equals $950.

Correct answer: Health evidence is waived, but the individual premium reflects attained age, risk class, form, and amount.

The statutory right removes evidence-of-insurability requirements but specifies individual premium factors; it does not preserve group pricing.

Correct answer: Basic is noncontributory; supplemental is contributory.

Funding is classified for each benefit: employer-paid basic coverage is noncontributory, while employee-paid supplemental coverage is contributory.

Correct answer: Apply to the insurer and pay the applicable individual policy premium within the period.

The employee exercises conversion by applying to the insurer within 31 days and paying the applicable premium; evidence of insurability is not required.

Correct answer: Paid-up additions

Paid-up additions provide additional permanent insurance, cash value, and no further premium requirement on the additions.

Correct answer: Conversion creates an individual contract, while portability continues a group arrangement.

Conversion and portability differ in the arrangement providing coverage: individual policy versus continued group coverage.