Question

1. Group life and health insurance are important employee benefits.
   1. Explain how group insurance differs from individual insurance.
   2. Name and describe each of the principles of group underwriting.

Answer 1

A. Difference between group insurance and individual insurance are as follows-

1.group insurance is provided by employer to the employee where as individual insurance is bought by individuals by own.

2. The premium is paid individually in individual insurance while it is split between employee and employer in group insurance.

3. Individual insurance doesn't have to qualified as business in order to be bought while group insurance does have to be qualified as business in order to be bought.

B. Different principles of group underwriting as follows-.

1. Group should not be formed for the sole purpose of obtaining insurance.

2. Benefits associated must be determined by formula to avoid the adverse selection.

3. Minimum number of employees must participate in the scheme.

4. Individual members must pay entire costs.