PSI Life Exam Practice Test

Which statement is NOT true regarding group life insurance plans?

1. Members benefit from individual underwriting

2. Coverage is often less expensive

3. It typically has a simplified enrollment process

4. Premiums are generally lower than individual policies

The correct answer is: Members benefit from individual underwriting

In group life insurance plans, members generally do not benefit from individual underwriting. Instead, the underwriting process is applied to the group as a whole, which allows individuals within the group to obtain coverage without undergoing individual health assessments. This collective underwriting is one of the key features of group life insurance. It simplifies the process for all members and makes it more accessible, particularly for those who might face challenges obtaining individual coverage due to health issues. The other statements highlight the advantages of group life insurance. Coverage is often less expensive because the risk is spread across a larger pool, which can lower rates. The enrollment process is usually simplified, allowing members to sign up with minimal paperwork or requirements. Additionally, premiums are typically lower than those for individual policies for similar coverage because of the group's collective bargaining power and the absence of individual risk assessment.