Question

What distinguishes compulsory plans from voluntary plans in employer-employee group insurance schemes?

a.

Compulsory plans require employees to pay the full premium, whereas voluntary plans are fully funded by employers.

b.

In compulsory plans, the employer pays the full premium, making them easier to administer than voluntary plans where employees contribute to the premium.

c.

Voluntary plans provide automatic coverage for all employees without consent, unlike compulsory plans which require an opt-in.

d.

Compulsory plans offer higher Free Cover Limits (FCL) than voluntary plans due to the lower administrative burden.

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).In compulsory plans, the employer pays the full premium, making them easier to administer than voluntary plans where employees contribute to the premium. Explanation:Compulsory plans in employer-employee group insurance schemes are distinguished by the fact that the employer pays the full premium, which simplifies administration. Voluntary plans, on the other hand, involve employee contributions towards the premium, complicating the enrollment process since individual employees must consent to being covered. Furthermore, voluntary plans must meet minimum participation limits, adding another layer of complexity in administration compared to compulsory plans, which automatically cover all eligible employees.

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Q. What distinguishes compulsory plans from voluntary plans in employer-employee group insurance schemes?
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