South Carolina Life Insurance Practice Exam

What type of policy typically does not require proof of insurability from the insured?

1. Individual Policy

2. Group Policy

3. Whole Life Policy

4. Universal Life Policy

The correct answer is: Group Policy

A group policy typically does not require proof of insurability from the insured because it is designed to cover a large number of people—often employees of a company or members of an organization—under a single contract. This facilitates easier enrollment and access to insurance, as individuals can often join the plan without having to provide individual health assessments. The rationale behind this approach is that group policies spread the risk among many participants, making the overall risk more manageable for the insurer. Because the group is evaluated collectively rather than individually, insurability proves less of a barrier to obtaining coverage compared to individual policies. In contrast, individual, whole life, and universal life policies usually necessitate proof of insurability to assess the risk associated with insuring an individual, ensuring that the insurer can evaluate the health and lifestyle factors of that specific person before extending coverage. This process can involve health questionnaires, medical exams, or both.