6.1.1 Contributory and Noncontributory
The employer keeps a record of employees who are covered by the insurance. These individuals receive a certificate of insurance which includes a summary of employee benefits and rights. There are two ways an employer can set up a group life plan: (1) contributory and (2) noncontributory.
Contributory - Group life insurance plans are those in which the employee 'contributes' a portion of the premium and the employer pays the rest.
Noncontributory - Group life insurance plans are those in which the employer pays the entire premium and the employee supplies no portion of the premium costs.
Employers have the option of contributing to the employees' premium payments in part or in full. Any costs to the employees are taken directly out of their paychecks. It may be the entire premium or it may be a portion of the whole, supplemented by the employer (which is most generally the case). Since employers pay all or part of the group premium, individual insureds are able to have insurance coverage for far less than what they would normally pay for an individual or personal plan.
Florida law requires 100% participation by eligible employees in noncontributory group life insurance plans. There is no requirement for minimal participation in contributory group life insurance plans.
