California Life and Health Insurance Practice Exam

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Study for the California Life and Health Insurance Exam. Prepare with comprehensive flashcards and multiple choice questions, each with detailed hints and explanations. Gear up for success with our extensive learning materials!

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What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect?

  1. 50%

  2. 75%

  3. 100%

  4. 25%

The correct answer is: 100%

In a noncontributory group health plan, it is essential that all eligible employees participate for the plan to become effective. This requirement ensures that the risk is spread evenly among all participants, which is critical for maintaining the financial stability and actuarial soundness of the insurance plan. When 100% of eligible employees enroll, it minimizes adverse selection—that is, the risk of only unhealthy individuals choosing to participate, which can lead to higher costs for the insurer and, consequently, for all participants. Thus, the requirement for 100% participation is a standard practice in noncontributory plans.

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