West Virginia State Life Insurance Practice Exam

Which of the following describes a benefit of group life insurance?

1. Increased complexity in enrollment

2. Potentially lower costs per member

3. Customization of benefits for each member

4. Mandatory medical examinations for all members

The correct answer is: Potentially lower costs per member

The benefit of potentially lower costs per member is a hallmark of group life insurance. This advantage arises because the insurer spreads the risk across a larger number of individuals, which often allows for reduced premiums compared to individual policies. Group life insurance policies typically have a larger pool of insured individuals, which results in economies of scale. The insurer can offer lower rates since the cost is shared among all members, minimizing the overall risk and expense for the group. Additionally, group life insurance often does not require individual medical underwriting, leading to more affordable options for employees or members of an organization. This makes it a cost-effective way for employers to provide life insurance benefits to their workforce compared to seeking individual policies, where higher premiums might apply based on health status. In contrast, the other options highlight aspects that do not align with the core advantages of group life insurance. Increased complexity in enrollment and mandatory medical examinations are generally not characteristics of group plans, as these features could discourage participation and increase costs. Customization of benefits for each member is also not typical in group insurance, as these plans usually offer standardized benefits to all members rather than personalized coverage.