LOMA 281 Module 4 Exam 2025
Questions and Answers
Group Insurance - ✔✔A method of providing life or health insurance coverage for a
group of people under one insurance contract.
commonly provide:
- life insurance, medical expense insurance, disability insurance, and dental insurance
coverage
Master group insurance contract - ✔✔An insurance contract that insures a number of
people.
Group insured - ✔✔An individual covered by a group insurance policy.
Group policyholder - ✔✔The person or organization that decides what types of group
insurance coverage to purchase for a specific group, negotiates the terms of the group
insurance contract, and purchases the group insurance coverage.
Which of these people or companies is a party to the group insurance contract? (Choose
all that apply.)
a. Jerome Tate
b. Able Life Insurance
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,c. The Stetson Company - ✔✔B & C- The Stetson Company and Able Life are the parties
to the contract. Stetson purchased the contract for the benefit of its employees, and the
contract names Stetson as the owner of the group policy. Jerome is insured by the
contract, but he is not a party to it.
requirements for a valid contract - ✔✔- The parties to the contract must mutually agree
to the contract's terms
- The parties must have contractual capacity
- The parties must exchange legally adequate consideration
-The parties must enter into the contract for a lawful purpose
Do you think Able Life and The Stetson Company (the parties to the group insurance
contract) have to meet these same four basic requirements?
a. Yes, the requirements generally are the same.
b. No, the requirements are different. - ✔✔a. The parties must meet the same
requirements whether they are entering into a group contract or an individual contract.
However, one difference between a group insurance contract versus an individual
insurance contract has to do with the lawful purpose requirement.
Group insurance contracts have no insurable interest requirement - ✔✔Instead, a group
contract meets the lawful purpose requirement because the policyholder buys the
coverage for others and is unlikely to benefit from the death of the insureds. As a result,
the group policyholder's interest in the contract doesn't present the same risk of creating
a wagering agreement.
Jerome is covered by the group life insurance plan issued by Able Life. This means that
Jerome is a group
a. Policyholder
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,b. Insured - ✔✔B. - Jerome is a group insured; The Stetson Company is the group
policyholder.
Is Jerome a party to the group insurance contract?
a. Yes
b. No - ✔✔B - The parties to the group life insurance contract are The Stetson Company
and Able Life.
Was The Stetson Company required to have an insurable interest in the lives of
participating employees?
a. Yes
b. No - ✔✔B. - A group policyholder doesn't need an insurable interest in the lives of
the insured group members. This is one difference between group life and individual
life insurance.
Certificate of insurance - ✔✔A document that describes the coverage that the group
insurance contract provides and a group insured's rights under the contract.
The Stetson Company's plan is a noncontributory plan. What does this mean?
a. Jerome must pay some or all of the premium for his coverage.
b. Stetson pays the entire premium for Jerome's coverage.
c. Jerome and Stetson equally split the premium for Jerome's coverage. - ✔✔B. - In a
noncontributory plan, the policyholder pays the entire premium for the coverage.
noncontributory plan - ✔✔A group insurance plan for which insured group members
are not required to pay any part of the group insurance premium.
contributory plan - ✔✔A group insurance plan under which insured group members
must pay part or all of the premium for their coverage.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, The Accent Company, an employer, has a group life insurance plan that insures the
lives of eligible employees. Accent pays the entire premium for the coverage. Check all
the statements that are true for this situation.
a. Accent's group life insurance plan is a noncontributory plan
b. Accent must provide employees with a copy of the master contract
c. Accent must name the beneficiary of the coverage - ✔✔A. - Accent's group life plan is
a noncontributory plan—employees are not required to contribute. Accent must
provide employees with a certificate of insurance, not the master contract. The
employee names the beneficiary for his life insurance coverage, not Accent.
group insurance provides expense savings in the following three areas: - ✔✔- sales
- underwriting and policy issue
- policy administration
Group underwriting costs are lower because - ✔✔the insurer evaluates the risk
characteristics of the group as a whole—not the risk presented by each group member.
One exception is for very small groups. For these, underwriters will evaluate group
members individually.
Policy issue costs are lower because the insurer issues one master policy rather than
many individual policies.
Group plan administration is mostly recordkeeping. Group life insurance requires
current information about - ✔✔- the name of each group insured
- the amount of coverage for each group insured
- the name of each group insured's beneficiary
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
Questions and Answers
Group Insurance - ✔✔A method of providing life or health insurance coverage for a
group of people under one insurance contract.
commonly provide:
- life insurance, medical expense insurance, disability insurance, and dental insurance
coverage
Master group insurance contract - ✔✔An insurance contract that insures a number of
people.
Group insured - ✔✔An individual covered by a group insurance policy.
Group policyholder - ✔✔The person or organization that decides what types of group
insurance coverage to purchase for a specific group, negotiates the terms of the group
insurance contract, and purchases the group insurance coverage.
Which of these people or companies is a party to the group insurance contract? (Choose
all that apply.)
a. Jerome Tate
b. Able Life Insurance
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 1
,c. The Stetson Company - ✔✔B & C- The Stetson Company and Able Life are the parties
to the contract. Stetson purchased the contract for the benefit of its employees, and the
contract names Stetson as the owner of the group policy. Jerome is insured by the
contract, but he is not a party to it.
requirements for a valid contract - ✔✔- The parties to the contract must mutually agree
to the contract's terms
- The parties must have contractual capacity
- The parties must exchange legally adequate consideration
-The parties must enter into the contract for a lawful purpose
Do you think Able Life and The Stetson Company (the parties to the group insurance
contract) have to meet these same four basic requirements?
a. Yes, the requirements generally are the same.
b. No, the requirements are different. - ✔✔a. The parties must meet the same
requirements whether they are entering into a group contract or an individual contract.
However, one difference between a group insurance contract versus an individual
insurance contract has to do with the lawful purpose requirement.
Group insurance contracts have no insurable interest requirement - ✔✔Instead, a group
contract meets the lawful purpose requirement because the policyholder buys the
coverage for others and is unlikely to benefit from the death of the insureds. As a result,
the group policyholder's interest in the contract doesn't present the same risk of creating
a wagering agreement.
Jerome is covered by the group life insurance plan issued by Able Life. This means that
Jerome is a group
a. Policyholder
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 2
,b. Insured - ✔✔B. - Jerome is a group insured; The Stetson Company is the group
policyholder.
Is Jerome a party to the group insurance contract?
a. Yes
b. No - ✔✔B - The parties to the group life insurance contract are The Stetson Company
and Able Life.
Was The Stetson Company required to have an insurable interest in the lives of
participating employees?
a. Yes
b. No - ✔✔B. - A group policyholder doesn't need an insurable interest in the lives of
the insured group members. This is one difference between group life and individual
life insurance.
Certificate of insurance - ✔✔A document that describes the coverage that the group
insurance contract provides and a group insured's rights under the contract.
The Stetson Company's plan is a noncontributory plan. What does this mean?
a. Jerome must pay some or all of the premium for his coverage.
b. Stetson pays the entire premium for Jerome's coverage.
c. Jerome and Stetson equally split the premium for Jerome's coverage. - ✔✔B. - In a
noncontributory plan, the policyholder pays the entire premium for the coverage.
noncontributory plan - ✔✔A group insurance plan for which insured group members
are not required to pay any part of the group insurance premium.
contributory plan - ✔✔A group insurance plan under which insured group members
must pay part or all of the premium for their coverage.
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 3
, The Accent Company, an employer, has a group life insurance plan that insures the
lives of eligible employees. Accent pays the entire premium for the coverage. Check all
the statements that are true for this situation.
a. Accent's group life insurance plan is a noncontributory plan
b. Accent must provide employees with a copy of the master contract
c. Accent must name the beneficiary of the coverage - ✔✔A. - Accent's group life plan is
a noncontributory plan—employees are not required to contribute. Accent must
provide employees with a certificate of insurance, not the master contract. The
employee names the beneficiary for his life insurance coverage, not Accent.
group insurance provides expense savings in the following three areas: - ✔✔- sales
- underwriting and policy issue
- policy administration
Group underwriting costs are lower because - ✔✔the insurer evaluates the risk
characteristics of the group as a whole—not the risk presented by each group member.
One exception is for very small groups. For these, underwriters will evaluate group
members individually.
Policy issue costs are lower because the insurer issues one master policy rather than
many individual policies.
Group plan administration is mostly recordkeeping. Group life insurance requires
current information about - ✔✔- the name of each group insured
- the amount of coverage for each group insured
- the name of each group insured's beneficiary
COPYRIGHT © 2025 BY OLIVIA WEST, ALL RIGHTS RESERVED 4
