South Carolina Life Insurance Practice Exam

In a group life insurance policy, the employer may select all of the following EXCEPT?

1. The premium rate

2. The coverage limits

3. The beneficiary designations

4. The claims process

The correct answer is: The beneficiary designations

In a group life insurance policy, the employer has certain rights and responsibilities regarding the administration of the policy. One area where the employer has significant discretion is in determining the premium rates and the coverage limits. These factors can reflect the employer's size, claims history, and negotiating power with the insurer. However, the designation of beneficiaries is not typically within the employer's control in a group life insurance policy. Instead, the policy usually allows individual employees, who are covered under the plan, to select their personal beneficiaries. This respects the personal nature of life insurance and aligns with the intention of providing financial support to the individuals or entities chosen by the insured employee. The claims process is also generally determined by the insurance company itself, as insurers establish how claims will be handled, what documentation is needed, and the specific steps to process claims. Thus, while the employer plays a role in the broader aspects of the policy, such as premiums and coverage limits, beneficiaries remain a personal decision for each insured individual.