How is group life insurance typically underwritten when compared with individually owned life coverage?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Group life underwriting evaluates the group, not each person in it. The insurer looks at the character of the group — the purpose for which it exists, its size, stability, and turnover — because a sound group spreads risk naturally without individual medical selection. This is the core economic rationale for group coverage under the New Jersey group life provisions beginning at N.J.S.A. 17B:27-68: administrative simplicity and pooled risk replace case-by-case medical underwriting. The New Jersey Department of Banking and Insurance oversees the marketing of group plans built on this model.
Why the other options are wrong
- A) Individual medical evidence and separate rating are the hallmarks of individual underwriting, which group coverage is designed to avoid.
- C) Group plans are underwritten at the group level; insurers do not automatically accept every organization that applies.
- D) Underwriting is the insurer's function; the policyholder administers eligibility but does not certify insurability for the insurer.
Memory hook
Underwrite the herd, not each cow: group risk is judged as a whole.