Massachusetts State Life Insurance Practice Exam

Group insurance is primarily designed for which of the following?

1. Individual policyholders

2. Family members of the insured

3. Employee groups and associations

4. Self-employed individuals

The correct answer is: Employee groups and associations

Group insurance is primarily designed to provide coverage for employee groups and associations, which allows for a collective approach to insurance. This type of insurance typically covers a large number of individuals under a single policy, making it more economical for members since the cost is generally lower than individual policies. The benefits of group insurance include ease of enrollment, often no medical underwriting, and the ability to extend coverage to dependents of those insured, thereby fostering a sense of security among employees and their families. Group insurance plans are advantageous for employers as they can help attract and retain talent while providing employees with valuable benefits. By pooling risks among a larger group, insurers are able to offer lower premiums and increased coverage options, which may not be as accessible to individuals purchasing insurance on their own. This type of insurance is typically not focused on family members of the insured or self-employed individuals, as it relies on a collective group structure to function effectively. Individual policyholders do not fit into the group framework, as their policies are tailored specifically for them rather than a group setting.