Life License Qualification Program (LLQP) Practice Exam

What percentage of eligible persons must a policy cover in a noncontributory group?

1. 25%

2. 50%

3. 75%

4. 100%

The correct answer is: 100%

In a noncontributory group insurance plan, it is essential that the policy covers 100% of eligible persons. This type of plan is usually funded entirely by the employer or the organization providing the insurance, meaning that eligible members do not contribute any premiums. The rationale behind requiring full coverage is to ensure that all employees or eligible participants are protected under the policy without any cost barriers. This promotes inclusivity and helps in risk pooling, which is a fundamental concept in insurance. With 100% participation, the insurer can better calculate the risk and cost associated with the group and provide coverage accordingly. In essence, noncontributory plans exist to maximize coverage and protect all individuals in the group uniformly, thereby fostering a supportive environment for employees and minimizing the potential for underwriting issues associated with applicants choosing to opt in or out.