Question 35

Group insurance is often subject to experience rating.

One key difference between individual life insurance and group life insurance is that group insurance is often subject to experience rating, which adjusts premiums based on the claims history of the group.

A) The premium is higher for group life insurance.

This statement is incorrect as group life insurance typically offers lower premiums compared to individual life insurance due to the risk being spread across a larger pool of insured individuals. Group policies often benefit from economies of scale.

B) Group insurance is often subject to experience rating.

This statement is correct because group life insurance can be rated based on the claims experience of the entire group. This means that if the group has a higher claim history, the premiums may increase, reflecting the actual risk associated with that group.

C) The medical requirements are stricter for group insurance.

This option is incorrect as group life insurance often has less stringent medical requirements compared to individual policies. Many group plans do not require medical exams for coverage, making it easier for members to obtain insurance.

D) Group insurance requires evidence of insurance for each covered person.

This statement is also incorrect. Unlike individual life insurance, where each person must provide evidence of insurability, group life insurance typically does not require individual evidence of insurability for all members, thus simplifying the enrollment process.

Conclusion

The correct answer highlights a significant aspect of group life insurance, which is its reliance on experience rating to determine premiums. Other options either misrepresent the nature of group insurance or incorrectly compare it to individual life insurance, reinforcing the distinct characteristics of these two types of policies.