QQuestionBusiness Management
QuestionBusiness Management
"A noncontributory group term life plan is characterized by:
A. The entire cost of the plan is paid for by the employer.
B. The entire cost of the plan is paid for by the employee.
C. The cost of the plan is shared by both employer and employee.
D. Both employer and employee must provide evidence of insurability."
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Answer
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Step 1:Let's solve this step by step:
Step 2:: Understand the key terms
A noncontributory group term life plan refers to an insurance plan where the entire cost is covered by a single party. In this context, we need to determine which party pays for the entire plan.
Step 3:: Analyze the meaning of "noncontributory"
The term "noncontributory" literally means that one party is not making a contribution. In an insurance context, this specifically means that the employer bears the full financial responsibility for the plan.
Step 4:: Evaluate the given options
A. The entire cost of the plan is paid for by the employer ✓ B. The entire cost of the plan is paid for by the employee ✗ C. The cost of the plan is shared by both employer and employee ✗ D. Both employer and employee must provide evidence of insurability ✗
Step 5:: Reasoning
In a noncontributory group term life plan, the employer covers 100% of the plan's cost. The employees do not pay any portion of the premium, making option A the correct answer.
Final Answer
Key Insight: "Noncontributory" means the employer fully funds the group term life insurance plan, with no financial contribution required from the employees.
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