Describe the basic underwriting principals for group insurance and how each of these help to maintain a favorable loss experience of the group. Be sure to address all five principals.

These are the principals from our class lecture notes:

Basic Underwriting Principles Insurance incidental to the group o The group should not be formed for the sole purpose of obtaining insurance Flow of person through the group o Younger individuals flow into the group o Older individuals flow out of the group o Flow helps to keep the average age of the group constant Automatic determination of benefits All employees automatically receive the same level of benefits Exception: cafeteria plans o o Minimum participation requirements o Noncontributory Employer pays entire premium 100 percent of eligible employees covered o Contributory Employee pays part of the costs Lower percentages of participation required (50 to 70 percent) - Efficient administration o Premiums collected from employees through payroll deduction Reduces the insurer's administrative expenses Keeps participation high " Basic Underwriting Principles Insurance incidental to the group o The group should not be formed for the sole purpose of obtaining insurance Flow of person through the group o Younger individuals flow into the group o Older individuals flow out of the group o Flow helps to keep the average age of the group constant Automatic determination of benefits All employees automatically receive the same level of benefits Exception: cafeteria plans o o Minimum participation requirements o Noncontributory Employer pays entire premium 100 percent of eligible employees covered o Contributory Employee pays part of the costs Lower percentages of participation required (50 to 70 percent) - Efficient administration o Premiums collected from employees through payroll deduction Reduces the insurer's administrative expenses Keeps participation high