New Jersey Life Producer Practice Exam

What is the minimum percentage of eligible members required for a non-contributory group plan to participate?

1. 50%

2. 75%

3. 100%

4. 25%

The correct answer is: 75%

In a non-contributory group insurance plan, the employer pays the entire premium, and participation is typically mandatory for all eligible employees. The minimum percentage of eligible members required to participate in such plans is often set at 75%. This requirement ensures a significant portion of the group is insured, which helps maintain the financial stability of the insurance pool and lessens adverse selection, where only high-risk individuals might choose to enroll if participation thresholds are too low. This requirement reflects the insurer's need to spread risk across a larger group, ensuring that the costs of providing coverage remain manageable and that there are enough participants to cover the claims made under the policy. In essence, having at least 75% of eligible members participate enhances the sustainability and effectiveness of a non-contributory group plan by ensuring broad enrollment.