Page 121 - Group Insurance and Retirement Benefit IC 83 E- Book

with some regularity. Group plans require the participation of a high percentage of

eligible people to ensure that the plan is not composed primarily of those who are likely
to have claims. Additionally, group members must sign up for insurance coverage very

soon after they become eligible-usually within 30 or 31 days. This prevents those who do
not purchase the coverage initially from changing their minds when they are injured or ill

and want to use the plan's benefits-another feature of group underwriting that helps avoid
adverse selection.

Of the eligible groups, METs are scrutinized more carefully than others because each
"sub-group" is small, whereas group insurance underwriting principles depend on larger

numbers. The MET sponsor decides what requirements the smaller groups must meet in

order to be accepted into the group. When enough sub-groups are included in the MET to
form a large group, underwriting and resulting rates are essentially identical to those of

larger groups.

Advantages of Group Coverage

The characteristics of group insurance we've described help insurers avoid adverse

selection, but the same characteristics are also the foundation for the advantages group
coverage offers the group members. One advantage is that people who sign up within the

specified time are not normally subject to medical examinations that could uncover an
uninsurable condition. Therefore, essentially everyone in the group may have coverage

regardless of their current physical conditions. That's the general rule: there are
exceptions.

Some insurers routinely require individual medical exams and underwriting for the very
smallest groups only, while members of larger groups need not meet this requirement.

This is typical. but there are exceptions, so it is important to know exactly how a
particular insurer writes group coverage. Some insurers require new group members to

complete an application and answer medical questions, but not to have physical
examinations.