South Carolina Life and Health Practice Exam

In which type of policy would you find a master contract and certificate of coverage?

1. Individual policy

2. Group policy

3. Universal policy

4. Term policy

The correct answer is: Group policy

In a group policy, a master contract is issued to an employer or organization, covering a group of individuals under a single plan. This contract provides the overall terms and conditions of the insurance arrangement. Each individual member of the group is provided with a certificate of coverage, which serves as proof of insurance and outlines the specific benefits, coverage details, and rights of the insured members. This setup allows the insurance provider to streamline administration, as the group policy is typically sold to one entity while covering multiple individuals, making it more cost-effective than individual policies. The certificates of coverage then provide individual members with the necessary information regarding their benefits, much like a smaller, personalized policy derived from the larger master contract.