Eligibility and Enrollment

Understanding eligibility requirements and enrollment procedures is essential for both the licensing exam and properly advising clients about group life insurance.

Eligibility Requirements

Employers establish eligibility requirements that determine which employees can participate in the group life insurance plan.

Common Eligibility Criteria

Eligible Classes

Employers must define eligible classes of employees to prevent discrimination:

Exam Tip: Class definitions must be based on employment-related factors, not factors that would discriminate against certain groups. "All healthy employees" would not be a valid class.

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Waiting Periods

A waiting period (also called an eligibility waiting period) is the time an employee must work before becoming eligible for group benefits.

Common Waiting Periods

Probationary Period Considerations

Longer waiting periods help employers:

• Reduce administrative costs for short-term employees
• Align with job probationary periods
• Reduce turnover-related enrollment costs

However, longer waiting periods may:

• Leave new employees without coverage
• Reduce plan attractiveness for recruiting
• Require alternative coverage options

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Enrollment Periods

Employees have specific opportunities to enroll in group life insurance.

Types of Enrollment Periods

Initial Enrollment

When employees first become eligible:

• Coverage up to the guaranteed issue amount typically requires no medical evidence
• Must enroll within a specified window (often 31 days)
• Late enrollment may require evidence of insurability

Open Enrollment

Open enrollment is an annual period when employees can:

• Enroll if not previously participating
• Increase or decrease coverage
• Add or remove dependents
• Make changes without evidence of insurability (up to limits)

Qualifying Life Events

Employees may enroll or change coverage outside normal periods due to:

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Evidence of Insurability

Evidence of insurability (EOI) is medical information required when certain conditions apply.

When EOI Is Required

Guaranteed Issue Amount

The guaranteed issue amount is the maximum coverage available without providing medical evidence:

EOI Process

When EOI is required:

1. Employee completes health questionnaire
2. May require physician statements or medical exams
3. Insurer evaluates and approves or denies the additional coverage
4. Approved coverage becomes effective per policy terms

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Active Work Requirement

Most group life insurance policies require employees to be actively at work on the effective date of coverage.

How It Works

Purpose of Active Work Requirement

This requirement prevents:

• Coverage beginning for someone already seriously ill
• Adverse selection at plan inception
• Immediate claims on new policies

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Key Takeaways

• Eligibility requirements define which employees can participate based on employment-related factors
• Waiting periods delay coverage, often aligning with probationary periods
• Initial enrollment occurs when first eligible; open enrollment is an annual change period
• Evidence of insurability is required for coverage above guaranteed issue limits or late enrollment
• The active work requirement ensures employees are working when coverage begins
• Qualifying life events allow special enrollment outside normal periods