6.1 Virginia Group Life Insurance Requirements
Key Takeaways
- Group life insurance in Virginia is governed by Title 38.2, Chapter 33, Article 2 (§§ 38.2-3317 through 38.2-3323) — not Chapter 31.
- Every covered member must receive a certificate of insurance; the master policy stays with the policyholder (the employer or association).
- A terminated insured has 31 days to convert group coverage to an individual policy with no evidence of insurability required.
- The conversion policy is permanent (whole life) at the insurer's customary attained-age rate — not the group rate and not term.
- Eligible group types include employer, labor union, trustee/MEWA, association, credit union, and creditor-debtor groups.
The Governing Law
Group life insurance in Virginia is regulated by Title 38.2, Chapter 33, Article 2 of the Code of Virginia (§§ 38.2-3317 through 38.2-3323). A common exam trap repeats "Chapter 31" — that is wrong. Chapter 33 covers all life policies; Article 2 carves out the group rules. Under § 38.2-3318.1, no group life policy may be delivered in the Commonwealth unless it conforms to one of the statutorily described group types.
Eligible Groups
Virginia does not allow a group to be formed for the sole purpose of buying insurance. The group must already exist for another reason. Recognized structures include:
| Group Type | Statutory Basis / Notes |
|---|---|
| Employer group | Employees of one employer; the employer is the policyholder |
| Labor union group | Members of a bona fide union; union holds the policy |
| Trustee / multiple-employer (MEWA) | A trust holding policies for two or more employers or unions |
| Association group | Members of an association formed for purposes other than insurance |
| Creditor-debtor group | Debtors of a creditor (credit life) |
| Credit union group | Members of a credit union |
Exam Tip: § 38.2-3323 generally requires a group policy to cover at least two persons at issue. Memorize "formed for a purpose other than obtaining insurance" — it is the standard distractor on association-group questions.
Underwriting and Non-Discrimination
Group life is underwritten on the group as a whole, not individually. The carrier evaluates the census (age distribution, sizes, industry) rather than each life. Coverage amounts are set by an objective formula the employee cannot personally select, which prevents adverse selection.
Typical benefit formulas:
- Salary multiples — 1×, 2×, or 3× annual salary
- Flat amount — e.g., a level $50,000 for every employee
- Position/class — graded by job classification (e.g., executives vs. hourly)
- Length of service — increasing with tenure
The formula must be applied uniformly within a class so that the plan does not unfairly discriminate among similarly situated employees. Amounts above a stated guaranteed-issue limit may require evidence of insurability, but amounts at or below it are issued automatically.
Certificate of Insurance
The master policy is delivered to the policyholder (employer/association). Each insured member receives a certificate of insurance summarizing their individual coverage. The certificate is the member's proof of coverage and must disclose:
| Certificate Element | Purpose |
|---|---|
| Benefit amount | The death benefit and any riders |
| Beneficiary procedure | How to name or change a beneficiary |
| Contribution | The employee's share of premium, if any |
| Claim procedure | How and where to file a death claim |
| Conversion notice | The 31-day conversion privilege |
A frequent trap: the employee never holds the master policy — only the certificate. If a question asks what the employee receives, the answer is the certificate.
The 31-Day Conversion Privilege
When an insured leaves the group, § 38.2-3318-series provisions grant a 31-day conversion right. Within those 31 days the former member may convert to an individual policy with no evidence of insurability — health is irrelevant.
| Conversion Element | Rule |
|---|---|
| Window | 31 days from the date group coverage terminates |
| Health evidence | None required during the window |
| Policy type | Permanent (whole life) — not term, not variable |
| Premium basis | Insurer's customary rate for the attained age and class |
| Maximum amount | Up to the amount of group coverage that ceased |
The new premium is higher than the group rate because it reflects the individual's current (attained) age and is permanent insurance. This is the correct, fully tested answer: "whole life at attained-age rates." Candidates who pick "term at group rates" miss the point.
Death During the Conversion Window
If the former member dies during the 31-day period — even without having applied to convert — the insurer must pay the death benefit that could have been converted. The conversion right is essentially a 31-day extension of death coverage.
When Conversion Is Triggered
- Employment terminates (any reason)
- The member moves to a non-eligible class
- The group policy terminates for the member's class (note: some statutes shorten the amount convertible if the whole plan ends)
- A dependent loses eligibility (dependent conversion)
Continuation During Protected Leave
Conversion ends coverage; continuation keeps the group coverage running:
| Situation | Continuation Source |
|---|---|
| Family/medical leave | Federal FMLA |
| Military leave | USERRA (federal) |
| Total disability | Often a waiver-of-premium provision keeps the certificate in force |
| Layoff | Per the master-policy terms |
Premium Structures
| Plan Type | Who Pays | Participation Requirement |
|---|---|---|
| Non-contributory | Employer pays 100% | 100% of eligible employees enrolled |
| Contributory | Employee shares cost | Typically 75% participation |
Non-contributory plans require everyone because no one self-selects — there is no adverse selection. Contributory plans set a 75% threshold to keep the risk pool broad. Premiums are usually collected by payroll deduction, which the employee must authorize in writing.
Exam Tip: "Non-contributory = 100% participation" and "Contributory ≈ 75%" are paired distractors. Lock both numbers in.
Which part of the Code of Virginia governs group life insurance policies?
A Virginia employee is terminated and wants to keep life coverage. Within the conversion window, what policy is she entitled to?
How many days does a terminated Virginia group member have to exercise the conversion privilege?
An association wants to buy group life for its members. Which fact would DISQUALIFY it as an eligible group in Virginia?