Which requirement must be fulfilled for an association to be eligible for a group life plan?

For an association to be eligible for a group life plan, it is essential that the group was formed for a purpose unrelated to selling insurance. This requirement ensures that the association is a legitimate organization representing individuals who share a common interest, rather than a mere collection of individuals with the primary intention of purchasing insurance.

In many cases, life insurance underwriters look for groups that serve a genuine purpose, such as professional organizations, alumni associations, or trade groups, because these groups tend to provide a level of stability and continuity that insurers seek. When an association forms for reasons apart from selling insurance, it helps guarantee a broader risk pool and minimizes the perception of adverse selection, where only those needing insurance would band together.

The other options do not fulfill the necessary criteria for group eligibility. For example, not all members need to be family-related or employees of a single employer, as the focus is on the commonality of interest rather than employment status or familial ties. The requirement for a specific number of members, such as 50, is also not universally applicable as different insurers may set varied requirements. Thus, the emphasis on a legitimate purpose for forming the group, independent of insurance motives, is key to qualifying for group life plans.