Group Life & AnnuitiesQuestion 682 of 716
In a contributory group plan, where employees pay part of the premium, insurers commonly require a minimum participation of about:
a.75% of eligible employees
b.10% of eligible employees
c.100% of eligible employees
d.0%, with no minimum
Explanation
Contributory plans typically require around 75% participation to spread risk and limit adverse selection. Requiring 100% is the noncontributory rule, and very low thresholds would invite adverse selection.
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- In a noncontributory group plan, the employer pays the entire premium, so insurers usually require:
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)