6.1 Washington Group Life Insurance Requirements
Key Takeaways
- Washington regulates group life insurance under Chapter 48.24 RCW (Revised Code of Washington), defining eligible groups and required provisions
- A terminating insured has 31 days to convert group term life to an individual permanent policy with no evidence of insurability
- The 31-day period is also an automatic extension of group life death coverage even if the worker never applies to convert
- Each covered member must receive a certificate of insurance summarizing benefits, beneficiary procedures, and conversion rights
- Contributory plans typically require 75% participation; non-contributory (employer-paid) plans require 100% of eligible employees
Group Life Insurance Under Chapter 48.24 RCW
Group life insurance is a single master policy issued to an entity (the policyholder) that covers a group of individuals (the insureds) under one contract. In Washington, group life is governed by Chapter 48.24 RCW (Revised Code of Washington). The exam expects you to distinguish the parties: the employer or association holds the master policy, while each covered worker holds only a certificate of insurance, not the contract itself.
Eligible Groups in Washington
RCW 48.24 lists the group types that may be insured. A group cannot be formed for the sole purpose of buying insurance.
| Eligible Group | Defining Feature |
|---|---|
| Employer group | Employees of one employer or affiliated employers |
| Labor union | Members of a bona fide union, union pays/collects premium |
| Trustee (multiple-employer trust) | Trust of two or more employers or unions |
| Association/professional group | Organized for a purpose other than buying insurance, 100+ members typical |
| Creditor group | Debtors of a creditor; benefit limited to the debt balance |
| Credit union / labor | As approved by the Office of the Insurance Commissioner (OIC) |
Non-Discrimination and Eligibility
Coverage amounts must be set by a formula that does not permit individual selection. Acceptable formulas include salary multiples (1x, 2x, 3x annual salary), job class, length of service, or a flat benefit per class. A producer cannot let one employee pick $200,000 while a same-class peer gets $50,000 — that is unfair discrimination.
Trap: "Evidence of insurability" (a health questionnaire or exam) is generally NOT required for amounts up to the plan's guaranteed issue limit. Above that limit, an insurer may require evidence. Candidates often wrongly answer that group life never requires any evidence.
The 31-Day Conversion Privilege
This is the single most-tested rule in Washington group life. When an insured leaves the group — termination, layoff, loss of eligibility, or class cancellation — RCW 48.24 grants a 31-day conversion period.
| Conversion Element | Rule |
|---|---|
| Time limit | 31 days from end of group coverage |
| Evidence of insurability | None required |
| Policy type issued | Individual permanent policy (whole life), NOT term |
| Premium | Insured's attained age rates at conversion |
| Maximum amount | Up to the amount of group coverage lost |
The Death-Coverage Extension Trap
A crucial nuance: if the insured dies during the 31-day conversion window — even without applying or paying — the group insurer must pay the death benefit it would have allowed under conversion. The 31 days is therefore both an application window and an automatic extension of death protection. Many exam questions hide this fact.
Worked Example
Maria's employment ends June 1. Her $100,000 group term coverage lapses. She has until July 2 (31 days) to convert to an individual whole life policy at her attained-age premium with no health questions. If Maria dies in a car accident on June 20 before applying, the insurer still pays $100,000 — the death-coverage extension applies. Note that conversion produces permanent insurance, so the new premium is far higher than her old group term cost — a point producers must disclose so the client is not surprised.
Conversion vs. Portability
Distinguish two options a leaving worker may face:
| Feature | Conversion | Portability (if offered) |
|---|---|---|
| Resulting policy | Individual whole life | Continued group term |
| Premium basis | Attained-age permanent rates | Group/portable term rates |
| Mandated by RCW 48.24 | Yes (31 days) | No — a voluntary plan feature |
| Evidence of insurability | None | Usually none, sometimes limited |
Conversion is the statutory right; portability is an optional contract benefit some carriers add.
Certificate of Insurance
Each covered member must receive a certificate that states, in plain language:
- The amount and type of coverage (death benefit, any riders)
- How to name or change a beneficiary
- The employee's premium share, if any (contributory plans)
- How to file a claim
- The conversion privilege and the 31-day deadline
Participation and Premium Arrangements
| Plan Type | Who Pays | Participation Required |
|---|---|---|
| Non-contributory | Employer pays 100% | 100% of eligible employees |
| Contributory | Employee shares premium | 75% participation (typical) |
High participation thresholds combat adverse selection — the tendency for only the unhealthy to enroll. Federal protections also continue coverage during FMLA (Family and Medical Leave Act) and USERRA (Uniformed Services Employment and Reemployment Rights Act) military leave.
Group Underwriting and Common Provisions
Group life uses group underwriting — the insurer evaluates the group as a whole (industry, average age, size, claims history) rather than each individual. This is why young, healthy enrollees can obtain coverage at low cost with no medical exam up to the guaranteed-issue limit.
Required and common group life provisions tested on the exam include:
- Grace period — typically 31 days for the policyholder to pay premium before lapse.
- Incontestability — after the certificate has been in force a stated period (often 2 years), the insurer cannot contest a claim for misstatements except fraud.
- Misstatement of age — the benefit is adjusted to what the premium would have purchased at the correct age.
- Beneficiary designation — the insured names and may change the beneficiary; if none survives, proceeds go to the estate.
Trap: Group term life has no cash value and no loan provision. Only after conversion to permanent insurance does cash value begin to build. A question stating a group term certificate "accumulates cash value" is false.
An employee's group life coverage ends when she is laid off on March 10. She dies on March 25 without having applied to convert. What happens?
When a Washington employee exercises the group life conversion privilege, what kind of policy and premium applies?
In a non-contributory group life plan in Washington, what level of participation among eligible employees is required?
Which document does a covered employee actually receive under a Washington group life plan?