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
Value or property given by an individual to a trustee who holds and administers it for the benefit of the donee (recipient of the gift). For example, a father entrusts a life insurance ...
Of four SEC divisions that regulates the securities markets and the participants within these markets. ...
Insurance company's total premium income plus investment income. ...
Insurance policy under which the value equals the benefits to be paid to the plan participants (employees) at normal retirement age, assuming that (1) their rate of earnings remains the ...
Loss of a key person due to death, disability, sickness, resignation, incarceration, or retirement. Because of the expertise of such an individual, there could be a loss of income, market ...
Principle that no liability exposure can result from the performance of proprietary functions. ...
Organization that develops and administers educational materials and examinations for life insurance agents. A significant objective of the courses is sales technique. ...
Financial holdings that can be converted into cash in a timely manner without the loss of principal, such as U.S. Treasury Bills. Liquidity of assets is one of the most important principles ...
Replacement for the earlier Family Automobile Policy (FAP) with these nine basic coverages: Coverage A Liability, The company pays damages for which an insured becomes legally obligated ...
Have a question or comment?
We're here to help.