New Jersey Life Producer Practice Exam

Which of the following types of plans does not require employee contributions?

1. Voluntary plan

2. Contributory plan

3. Non-contributory plan

4. Group plan

The correct answer is: Non-contributory plan

A non-contributory plan is designed so that the employer pays the entire premium for the insurance coverage, and employees are not required to contribute any funds towards the plan. This structure often leads to higher participation rates among employees since they do not have to bear any costs. In such plans, the employer's responsibility is to ensure that all eligible employees are covered without financial contributions from them, making it an attractive choice for both employers and employees. In contrast, voluntary plans typically allow employees to choose to enroll and may involve individual financial contributions from them. Contributory plans require employees to contribute toward the premiums, which can sometimes deter participation. While group plans can include both contributory and non-contributory options, the defining factor of a non-contributory plan is the complete coverage by the employer without requiring any employee contributions.