Question 58

Group life policies do not need to be formed solely for insurance purposes.

Group life policies can be established for various reasons, and it is not a requirement that the group be formed strictly for the purpose of obtaining insurance. This distinguishes option D as the incorrect statement regarding group life policies.

A) a master policy is issued to the company

This statement is correct because, in group life insurance, a master policy is indeed issued to the employer or organization that sponsors the plan. This serves as the primary contract between the insurer and the group, which is foundational to how group insurance operates.

B) Individual insureds receive a certificate of insurance

This statement is accurate as well. In a group life insurance policy, individual members of the group receive a certificate of insurance that outlines their coverage under the master policy. This document confirms their membership and the protections afforded to them.

C) the group must contain a specified number of members

This statement is also true. Group life insurance policies typically require a minimum number of members to be eligible for coverage, as this helps spread risk among a larger pool of insured individuals, which is a fundamental principle of group insurance.

D) the group must be formed for insurance purposes

This statement is incorrect. A group can be formed for various reasons, such as employment or professional affiliation, and does not have to be specifically established for the purpose of obtaining insurance. This flexibility is a key characteristic of group life policies.

Conclusion

Option D is definitively the incorrect statement because it misrepresents the nature of group life policies, which do not require that the group be formed solely for insurance purposes. In contrast, options A, B, and C accurately describe essential characteristics of group life insurance, reinforcing why they are correct.