North Carolina Life Agent Practice Exam

A noncontributory group term life plan is defined by a key characteristic where the entire cost of the plan is paid for by the employer. This means that all employees covered under the plan do not make any contributions towards the premium; the employer assumes full responsibility for the cost. This arrangement is beneficial as it promotes higher enrollment rates since employees do not have to pay anything out of pocket, making life insurance accessible and straightforward for them.

In such a plan, coverage is typically uniform among participants, and the employer may determine the level of benefits provided. This contrasts with contributory plans, where costs are shared, allowing employees to contribute towards their coverage or choose varying amounts of coverage based on individual preference. In summary, the defining feature of a noncontributory plan is that employees receive life insurance coverage at no cost to themselves, fully funded by the employer.