South Carolina Life Insurance Practice Exam

Group life insurance policies are typically written as which type of insurance?

1. Term Insurance

2. Whole Life Insurance

3. Permanent Insurance

4. Annually Renewable Term Insurance

The correct answer is: Term Insurance

Group life insurance policies are typically written as term insurance because they provide death benefits for a specified period of time, often tied to the duration of employment or membership in a group. This design allows employers or organizations to offer coverage at a lower cost than individual policies, making it more accessible for members. Term insurance is particularly suited for group policies since it is generally less expensive and can easily cover a larger number of individuals. The policies typically offer a fixed amount of coverage for a set term, and this coverage is often renewable on a yearly basis. Individuals participating in group life insurance usually do not have to undergo medical exams, further enhancing its appeal. Whole life and permanent insurance offer lifetime coverage and accumulate cash value, which is not a primary focus of group life policies. While annually renewable term insurance could also be an option for groups, it specifically refers to a type of term insurance that renews each year, which is a narrower definition compared to the broader category of term insurance overall. The most common approach for group policies remains traditional term insurance due to its simplicity and cost-effectiveness.