Tennessee Insurance Practice Exam

Which requirement must be met for an association to be eligible for a group life plan?

1. Association must have a minimum of 100 members

2. Group was formed for a purpose other than acquiring insurance

3. All members must be employed at the same organization

4. The group must meet annually

The correct answer is: Group was formed for a purpose other than acquiring insurance

For an association to qualify for a group life plan, it is essential that the group was formed for purposes other than merely acquiring insurance. This requirement ensures that the group has a legitimate reason for its existence, such as promoting a common interest or providing support to its members, which is a key feature in distinguishing it from a mere insurance scheme. By necessitating a legitimate organizational purpose, insurance providers can maintain the integrity of group plans and ensure that the coverage is provided to members who share a common bond rather than to an arbitrary collection of individuals. The other options do not align with the fundamental criteria set forth for group life insurance eligibility. For instance, having a minimum of 100 members is not a universal requirement, as different insurers may have varying standards for group size. Additionally, it is not a requirement that all members be employed at the same organization, as groups can consist of individuals from various employers. Lastly, although some groups may hold annual meetings, this is not a foundational criterion for eligibility in obtaining a group life plan. Thus, the emphasis on the group being formed for a purpose beyond insurance acquisition is crucial in understanding the eligibility for such plans.