Group life insurance is most commonly associated with employers. Other common applicants for group life insurance include: •Multiple Employer Trusts (METs) •Labor Unions •Creditors Any group can apply for insurance, but the insurance must be incidental to the group. A group of individuals cannot be formed for the express purpose of obtaining group life insurance; they must be associated for some other reason.

This doesn't mean that groups of employers can't band together to obtain a better deal on a group life insurance plan. In fact, this is quite common. Multiple Employer Trusts (METs) are groups of small employers from a common industry that join together to form a larger group in attempts to be more attractive as a group to the insurer.

A distinguishing feature of group life insurance is that one policy is issued that covers multiple lives. The policy is issued to the employer or other authority. It is that single authority who is the policy owner. Each participant in the group plan is issued a certificate, which serves as evidence of coverage. Anyone covered under a group life policy may assign their benefits and designate their beneficiary. Another notable difference between group and individual insurance is the underwriting process. Insurance company underwriters examine personal characteristics of every applicant for an

individual policy. That is not done with most group insurance applications. **NOTE** 1) The associations in a Multiple Employer Trust (MET) are typically in the same industry. 2) Group life insurance is typically issued without medical underwriting. 3) The covered employees receive a certificate of coverage, the employer is the master policy holder. *******************************

The factors that typically go into the underwriting process are the type of group, the nature of its business, its physical location, the size of the group, and the average age of the group's members. No evidence of insurability or medical exams are required of any of the group's members. However, group rates are based to some extent on past claims history (experience rating) of the group. A group life policy is a cancellable policy, meaning that either the employer or the insurer may cancel the policy. The employer may cancel at any time as long as the insurer and the employees are given a 31-day notice.

To combat adverse selection, insurers use participation percentages. If the plan is non-contributory, meaning that the employer pays the premium, 100% of the eligible employees must participate in the plan. If the plan requires employee contributions (contributory), the required participation is 75%. In other words, they are telling the employer, “We will insure your group, but we don’t just want just the high-risk employees, we also want the healthy people that are less likely to file claims.” If the group fails to meet participation percentage requirements, the insurer may reject the group.

Employers are free to switch insurance carriers for their group coverage or terminate coverage altogether. There are statutory rules that regulate the terms and conditions that must be followed when this occurs, including: •The employees must be notified that the policy is being discontinued. •All group policies must provide for an extension of benefits. The policy must clearly explain the terms of this right. The usual continuation period is 31 days. •If a policy is discontinued, benefits must automatically be extended for

disabled employees. •When one insurer replaces another, the prior carrier is liable for all claims incurred during any extension periods. Also, the new carrier must cover all employees who were eligible to participate under the prior carrier. The new carrier must disregard any pre-existing conditions that would otherwise make a participant uninsurable.