Massachusetts Life Producer Practice Exam

What type of life insurance coverage do employees typically receive under a group life insurance plan?

1. Whole life insurance

2. Universal life insurance

3. Term life insurance

4. Variable life insurance

The correct answer is: Term life insurance

In a group life insurance plan, employees typically receive term life insurance coverage. This type of policy is designed to provide a specified benefit for a limited period, commonly the duration of employment or membership in the group. The focus on term life insurance is due to its lower cost compared to whole life, universal life, or variable life insurance. The premiums are generally more affordable, making it an attractive option for employers to offer as part of employee benefits. Additionally, term life insurance provides a straightforward and easily understandable benefit that can be effectively communicated to all employees. Whole life insurance, universal life insurance, and variable life insurance are individual permanent policies that often involve more complex features, including investment components and cash value accumulation, which may not be suitable for group coverage. Group policies emphasize simplicity and affordability, which is why term life insurance is the standard coverage chosen for employees under such plans.