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
Determination that group plans offering legal services are limited to an annual tax-free benefit of $70 per employee; group plans may offer employer-provided educational assistance plans on ...
Dividend in a participating policy paid after the death of an insured, representing dividends earned between the last dividend date and the insured's death. ...
Plan that combines the simplicity and flexibility of the traditional profit-sharing plan with the best features of the defined benefit plan and the target benefit plan. By age-weighing the ...
Minimum of care owed by one party for the physical safety of another. Liability suits are brought because of negligent acts and omissions resulting from failures to exercise due care. ...
Insurance salesperson who is licensed to place coverage with an insurance company that is not licensed to do business in the state of domicile of the broker. The excess line coverage must ...
Instrument that guarantees compliance with various city, county, and state laws that govern the issuance of a particular license to conduct business. ...
Form that covers exposures associated with efforts to operate a business that is damaged by a peril such as fire. For example, a special electrical generator may have to be purchased in the ...
Phrase used to describe a method of annuity payout that guarantees a specified number of years, regardless of whether an annuitant remains alive. ...
Canadian retirement plan much like U.S. individual retirement account (IRA). Here, an employee can contribute on a tax deductible basis C $3500 each year as a member of an employer pension ...
Have a question or comment?
We're here to help.