Life License Qualification Program (LLQP) Practice Exam

In a noncontributory group term life plan, who pays the entire cost of the plan?

1. Employer

2. Employee

3. Both employer and employee

4. Insurance company

The correct answer is: Employer

In a noncontributory group term life plan, the employer is responsible for paying the entire cost of the plan. This type of plan is designed to provide life insurance coverage to employees without requiring them to contribute any premiums. The employer takes on the financial responsibility and manages the plan, which often serves as an employee benefit aimed at attracting and retaining talent. In this arrangement, employees receive the benefit of life insurance protection without any direct cost to them, which can enhance job satisfaction and loyalty. Noncontributory plans contrast with contributory plans, where employees would share in the costs. Other options, such as the employee, a combination of both the employer and employee, or the insurance company, do not apply because the fundamental characteristic of a noncontributory plan is that the employer solely covers the premiums.