Massachusetts State Life Insurance Practice Exam

Which of the following is a common type of group life insurance?

1. Group critical illness insurance

2. Group term life

3. Individual universal life

4. Group variable life

The correct answer is: Group term life

Group term life insurance is a common type of group life insurance primarily because it provides death benefits to a large number of individuals under a single contract, typically sponsored by an employer or an organization. This type of insurance is characterized by its cost-effectiveness, making it an attractive option for employers to offer as part of their employee benefits package. The coverage is generally straightforward—if an insured member passes away during the term of the policy, a specified benefit amount is paid out to their beneficiaries. This aligns well with the needs of groups, providing basic life coverage that can be extended to all members without requiring individual underwriting, which streamlines the process and reduces administrative burdens. In contrast, options like group critical illness insurance, while valuable, are not primarily focused on life insurance as they insulate against specific health incidents rather than providing life benefits. Individual universal life represents a personal insurance contract rather than a group offering, and group variable life insurance, although available, is less common compared to group term life due to its complexity and investment components that don't appeal to all group members. Therefore, the correct choice stands out clearly as the preferred and most prevalent form within the context of group life insurance.