A business will typically use which type of life insurance to cover its employees?

• A. Variable life
• B. Group policy
• C. Whole life for individuals
• D. Term insurance for individuals

Answer: (B)

For covering a group of employees, a group life policy is used. This plan is issued to the employer as a master policy and provides life coverage for a defined group of employees, with each person receiving a certificate of coverage. Because the risk is spread across many people, underwriting is typically lighter and the cost per employee is much lower than individual policies. The employer usually pays the premiums, and the coverage amounts are often set as a flat amount or a multiple of salary. Coverage generally ends when employment ends or the group plan is terminated, though some plans allow conversion to an individual policy if an employee leaves or retires. The other options are individual policies, which are more costly and are intended for one person rather than a whole workforce.