Under California group disability insurance law, group coverage may be written under a master policy issued to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under California Insurance Code Section 10270.5, group disability insurance must be written under a master policy issued to qualifying policyholders, including employers, government agencies, unions and associations, and certain trusts. The purpose of the rule is to ensure the group exists for reasons other than obtaining insurance. Coverage cannot be written under a master policy for individual consumers, retail customers, or property owners, because those persons are not part of an eligible group; they would need individual coverage instead. These statutory categories mirror the federal definition of permissible groups and keep group marketing limited to genuine employment, union, association, or trust relationships.
Why the other options are wrong
- B) An individual consumer buying coverage for himself or herself receives an individual policy, not group coverage under a master policy.
- C) Customers of a retailer are not an eligible group; group law requires a defined employment, union, association, or trust relationship.
- D) Property owners are not an eligible group for group disability coverage; a real estate broker cannot write a group policy on them.
Memory hook
Eligible groups: employers, unions, associations, trusts. Customers and strangers do not make a group.