Question 11

Lower cost due to group underwriting

Group life insurance is advantageous for employers primarily because it typically offers lower costs due to group underwriting. This process assesses the risk of the entire group rather than individual members, allowing employers to provide coverage at a more affordable rate.

A) Lower cost due to group underwriting

This option is correct as group insurance allows for a shared risk among all participants, which significantly reduces the cost per individual. Employers benefit from these lower premiums, making it a cost-effective solution for providing life insurance to their employees.

B) Individual control over policy terms

This option is incorrect because group life insurance does not provide individual control over policy terms. Instead, the terms are standardized across the group, which limits customization for individual employees and does not serve as an advantage for the employer.

C) Permanent coverage for all participants

This option is also incorrect. Group life insurance typically offers term coverage rather than permanent coverage. Employers may find this disadvantageous as it does not guarantee long-term insurance for employees, which can lead to gaps in coverage.

D) Customized benefits for each employee

This choice is incorrect since group life insurance policies generally do not allow for customized benefits tailored to each employee. Instead, benefits are uniform for all group members, which does not provide the flexibility that might be advantageous for employers seeking to meet diverse employee needs.

Conclusion

In conclusion, the correct answer is A) Lower cost due to group underwriting, as it highlights the primary benefit of group life insurance for employers. The other options fail to present advantages since they do not align with the fundamental characteristics of group policies, which prioritize affordability and uniformity over individual customization and permanent coverage.