Frequently-Asked Questions about Health Insurance
The health insurance purchasing process involves many people, from the customer and the agent to the underwriter and insurance company. The average individual can become baffled by the process and learning about the process gives you much more purchasing power.
What is the major difference between group and individual health insurance?
The major difference between group and individual health insurance involves evidence of insurability.
To purchase individual health insurance, a person must generally answer a health questionnaire and undergo a medical examination to provide evidence of insurability to the insurance company. An insurer may decline coverage on the basis of the applicant's personal habits, health, medical history, age, income or any other factors that bear on risk acceptance. Alternatively, the insurer may issue a policy with limitations on coverage.
However group health insurance is issued without medical examination or other evidence of individual insurability because the insurer knows that it can cover enough individuals to balance those in poor health against those in good health. The risk of an insurer failing to achieve this balance is diminished as the size of the group increases, or as the insurer underwrites additional group policies and increases the total number of individuals covered. This is known as the "law of large numbers."