General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Adverse selection is generally a greater concern in individually underwritten policies than in group plans because:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In individual insurance, each applicant self-selects: those who know they are high risk are more likely to seek coverage, creating adverse selection. In group insurance, the employer or association enrolls a defined population — healthy and sick alike — often without individual health screening, so the risk pool includes the full spectrum. Broad group enrollment dilutes adverse selection and makes claims more predictable, which is why group plans can rely less on individual underwriting.
Why the other options are wrong
- B) The concern is the SELECTION of who enrolls, not the health profile of group members in the abstract; groups can be healthy or sick.
- C) Relative price is not the reason adverse selection differs; the reason is who chooses to join the pool.
- D) Group plans are often experience-rated on their own claims; that does not eliminate adverse selection concerns but is not the reason for the difference.
Memory hook
Individuals pick their timing; groups pick their whole crowd. Broad enrollment defeats self-selection.