Colorado Life Producer License Practice Test

What percentage of participation is required for noncontributory plans?

1. 75%

2. 50%

3. 100%

4. 25%

The correct answer is: 100%

In a noncontributory plan, the employer is responsible for funding the entire plan without requiring contributions from employees. Because of this structure, it is essential that all eligible employees participate to ensure the plan can adequately provide benefits based on the coverage promises. Therefore, a requirement of 100% participation is established to ensure that the plan is effective and benefits are realized for all participating employees. If any eligible employee decides not to participate, it could undermine the objectives of the plan, as the employer is assuming the total financial responsibility.