California Life and Health Insurance Practice Exam

In terms of underwriting, how do group and individual life insurance differ?

1. Group insurance does not require medical questions

2. Individual insurance is less costly than group insurance

3. Group policies require medical exams for each member

4. Individual insurance only covers the primary insured

The correct answer is: Group insurance does not require medical questions

Group insurance typically does not require individual medical questions during the underwriting process, which makes it more accessible for participants. In a group policy, the risk is spread across a large number of insured members, and as a result, insurers often forego detailed medical underwriting for each individual. This allows employers or organizations to provide coverage for their employees or members without having to evaluate each person's health status. On the other hand, individual insurance typically requires a more thorough underwriting process that includes medical questions and often medical exams for the applicant. This process is necessary for the insurer to assess the risk associated with insuring that particular individual. The other options do not accurately reflect the distinctions between group and individual life insurance. Individual policies can often be more expensive due to the tailored coverage, while group policies usually provide lower premiums because of the collective risk management. Additionally, group insurance does not require medical exams for each member, while individual insurance policies are designed primarily for the named insured but can have options for coverage of additional members, depending on the policy.