Life Insurance Policies
Why do group plans fix the amount of each member's cover by a formula rather than by individual choice?
Answer and explanation
Answer: B. A schedule tied to salary or position removes the member's ability to select a large amount because of a known impairment, which is what makes group underwriting workable. Amounts commonly differ between classes, so identical cover is not required.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, group amounts of insurance
More life insurance policies questions
- How does fixed indexed life differ from variable life in where the risk falls?
- How does group credit life differ from individual credit life?
- How does level term differ from decreasing term in the pattern of benefit and premium?
- How does the cash value of a continuous premium whole life policy behave over time?
- How does the cash value of a twenty payment whole life policy compare with that of continuous premium whole life issued at the same age?
- How does the death benefit of an increasing term rider or policy change over time?
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