New York Child Abuse Identification and Reporting Practice Exam

What does group insurance typically offer to participating employees?

1. Individualized policies

2. Lower premiums and coverage limits

3. Shared risk among members

4. Strict eligibility requirements

The correct answer is: Shared risk among members

Group insurance provides participants with shared risk among its members. This means that the financial risk associated with claims is distributed across many individuals, which helps reduce the overall cost of insurance for each member. By pooling resources and spreading the risk, group insurance can offer lower premiums compared to individual insurance policies. Because claims are paid out from this larger pool of contributions, the impact of one individual's claim is less significant to the overall scheme. Individualized policies, which are customized for a single person, do not typically provide the collective benefits that group insurance does. Similarly, while group insurance may offer competitive premiums, it doesn’t inherently come with lower coverage limits, as that depends on the specifics of the plan chosen. Lastly, group insurance usually has more flexible eligibility requirements compared to individual plans, since it aims to enroll a wider audience under a single policy. This collaborative approach to healthcare and risk management is a defining characteristic of group insurance, underscoring the importance of collective participation.