A noncontributory group term life plan is characterized by which of the following?

A noncontributory group term life plan is characterized by which of the following?

• A. Cost shared between employer and employee
• B. Premiums paid through payroll deduction
• C. Entire cost paid for by the employer
• D. Employees can opt out of coverage

Answer: (C)

In a noncontributory group term life plan, the entire cost of the premium is paid for by the employer. This means that employees do not have to contribute any portion of the premium for their coverage. Noncontributory plans are designed to provide a significant employee benefit with no cost to the employees, ensuring that all eligible employees are automatically covered, which simplifies enrollment and encourages widespread participation. Other options involve scenarios that do not align with the characteristics of noncontributory plans. For example, sharing costs between the employer and employee or using payroll deductions suggests a contributory plan, where employees contribute to their coverage, which is not applicable in a noncontributory structure. Additionally, in a noncontributory plan, employees typically do not have the option to opt out of coverage, as acceptance is automatic for all eligible participants.

In a noncontributory group term life plan, the entire cost of the premium is paid for by the employer. This means that employees do not have to contribute any portion of the premium for their coverage. Noncontributory plans are designed to provide a significant employee benefit with no cost to the employees, ensuring that all eligible employees are automatically covered, which simplifies enrollment and encourages widespread participation.

Other options involve scenarios that do not align with the characteristics of noncontributory plans. For example, sharing costs between the employer and employee or using payroll deductions suggests a contributory plan, where employees contribute to their coverage, which is not applicable in a noncontributory structure. Additionally, in a noncontributory plan, employees typically do not have the option to opt out of coverage, as acceptance is automatic for all eligible participants.