What percentage of eligible employees must enroll in a contributory group life insurance policy?

In a contributory group life insurance policy, it is typically required that a certain percentage of eligible employees enroll in the plan for it to be valid and effective. The most common standard in many states, including Pennsylvania, is that at least 75% of eligible employees must participate.

The rationale behind setting a threshold of 75% is to ensure that the risk pool is broad enough to keep premiums affordable and the coverage viable. This participation rate helps the insurance company manage risks effectively and prevents adverse selection, where only those who anticipate needing the insurance would enroll, potentially leading to unsustainable losses for the insurer.

Understanding this requirement is essential for both employers and employees when considering group insurance policies, as it impacts the availability and cost-effectiveness of the insurance offered. This clarity is crucial for organizations planning to implement or maintain such offerings in their employee benefits package.