Group Underwriting
Definition of "Group underwriting"
Process of forming a large group of homogeneous lives that in order to allow the law of large numbers to operate, thereby projecting a probable rate of mortality or morbidity whose creditability approaches one, and standard deviation approaches zero. Since no evidence of insurability has to be submitted on an individual basis, the objective of this type of underwriting is to minimize adverse selection by any member of that group. In an effort to achieve this minimization, certain underwriting rules apply: the group must be formed for reasons other than obtaining insurance, or people who have a particular disease would join together for the sole purpose of buying insurance; a constant flow of young people into the group and outflow of older people out of the group is required so that, statistically, the average person (standard health) will continue to be insured; the insurance benefits should automatically be determined by some type of formula on behalf of the members, or only those members who are in poor health would select the higher limits of coverage; and close to total participation of all eligible employees should be achieved.
Popular Insurance Terms
Plan whereby adjustments are made in the premium, as the premium increases to reflect the non proportionate increases in expenses. Generally, the expenses of acquisition costs, ...
Technique of estate planning under which an estate is divided into two parts and taxed at a lower rate rather than remaining as a whole and taxed at a higher rate. This division may be ...
Process in which the policy-holder surrenders the policy when: cash proceeds can be invested elsewhere at a higher return than that being earned on the cash value within the policy; ...
Same as term: engineering approach; human approach ...
Business income coverage form that covers an insured business in the event that a manufacturer's operations are interrupted or suspended, thereby resulting in a monetary loss because a ...
Reinsurance ceded to an insurance company that is a non admitted insurer. ...
Exchange of a new policy for one already in force. ...
Procedure that moves up the maturity date of the municipal bond to its call date. The call date permits the issuer of the bond to redeem the bond at any time after a stipulated minimum ...
in property and casualty insurance, termination of a policy because of failure to pay a renewal premium. in life insurance, termination of a policy because of failure to pay a premium and ...
Have a question or comment?
We're here to help.