Blanket Health Policies
- Blanket health policies are designed to cover a group exposed to similar risks, with a constantly changing membership.
- Such policies may be issued to entities like airlines or schools to cover passengers or students, respectively.
- Unlike group insurance, blanket health plans do not provide individual certificates of coverage.
- Example:
- A university purchased a blanket health policy to cover all students participating in sports events throughout the academic year.
Certificate of Insurance
- A certificate of insurance is a document provided by an insurance company or broker that verifies coverage under specific conditions for listed individuals.
- In group insurance, the policyholder is the employer (or other organization) who maintains the master policy, while the insured employees receive a certificate of insurance instead of an individual policy.
- Example:
- When Jake started his new job, he received a certificate of insurance confirming his coverage under the company's group health insurance plan.
Contributory Plan
- A contributory plan is a group insurance plan where both the employer and employees share the cost.
- Usually, at least 75% of eligible employees must participate in the plan.
- Employees contribute to the premium payments.
- Example:
- The company’s health insurance was a contributory plan, so Emma and her coworkers each paid a portion of the premium along with their employer.
Conversion Privilege
- The conversion privilege allows a policyholder to replace an expiring insurance policy with a new one, continuing the coverage without proving insurability.
- Conversion can be based on the insured's attained age (age at conversion) or original age (age at the initial policy issue).
- This option is common in term life and group insurance policies.
- Example:
- When Jack left his job, he used the conversion privilege to switch his group life insurance to
an individual policy without needing to prove his health status.
Credit Policies
- Credit policies are intended to assist the insured in repaying a loan if they become disabled due to an accident or illness, or in the event of their death.
- In the event of disability, the policy supplies monthly benefits that are equivalent to the required loan payments.
- Upon the insured's death, the policy will provide a lump sum payment to the creditor to settle the remaining loan balance.
- Example:
- When Mike took out a car loan, he also purchased a credit policy to ensure the loan would be paid if he became disabled or passed away unexpectedly.
Franchise Insurance
- Franchise insurance is a life or health insurance plan that covers groups of individuals with separate policies that have uniform provisions but may vary in benefits.
- These policies are typically solicited within an employer's business with consent
- Franchise insurance is typically designed for groups that are too small to meet the requirements for standard group coverage.
- When the policy is life insurance, it is often referred to as wholesale insurance.
- Example:
- A small accounting firm with ten employees offered franchise insurance, providing each employee with individual health insurance policies tailored to their needs.
Master Policy
- The master policy is issued to the employer as part of a group plan and includes all the insuring provisions that outline employee benefits.
- Individual employees who are covered under the group plan receive certificates that summarize their coverage details.
- Example:
- Jane's company issued a master policy for their group health insurance plan, and each employee received a certificate of insurance highlighting their specific benefits.
Noncontributory Plan
- In a noncontributory plan, the employer pays the total cost of employee benefits.
- Most states require coverage be provided for all eligible employees.
- Employees do not contribute to the premium payments.
- Example:
- At Linda's workplace, the noncontributory health insurance plan meant she didn't have to pay anything for her medical coverage, as the employer covered all the costs.
Persistency
- Persistency in insurance refers to the proportion of policies that continue to be in effect with the insurer after a certain amount of time.
- Persistency is reduced when policies are replaced by other insurers, canceled by the policyholder, or lapse because of nonpayment.
- Businesses with stronger persistency rates are typically more secure and generate higher profits than those with weaker persistency.
- Typically, companies strive to achieve an 80% persistency rate after three years and a 60% rate after five years, indicating that 60% of the policies issued five years prior should still be active.
- Example:
- An insurance company with a high persistency rate demonstrates strong customer retention, indicating policyholders are satisfied with their coverage and service.