Question

What is the primary reason employer-employee group insurance schemes can offer a Free Cover Limit (FCL) without requiring individual evidence of insurability for coverage up to a certain level?

a.

Employees are generally less healthy than the general population.

b.

Employees can choose the amount of basic insurance they want.

c.

Employers may require health screenings before offering permanent employment, indicating employees are generally healthier.

d.

All employees are required to submit evidence of insurability, regardless of their health.

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).Employers may require health screenings before offering permanent employment, indicating employees are generally healthier. Explanation:The primary reason employer-employee group insurance schemes can offer a Free Cover Limit (FCL) without requiring individual evidence of insurability up to a certain level is that employees are generally healthier than the general population. This healthiness comes from requirements such as being fit enough to work full-time and undergoing health screenings or medical examinations before being offered permanent employment. These factors significantly reduce the risk of adverse selection and justify the provision of FCL, making the underwriting process more efficient and less costly.

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Q. What is the primary reason employer-employee group insurance schemes can offer a Free Cover Limit (FCL) without requiring individual evidence of insurability for coverage up to a...
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