Arizona Life and Health Practice Exam

Which factor is generally NOT considered when determining group health insurance premiums?

1. Average age of group members

2. Health status of group members

3. Income level of group members

4. Size of the group

The correct answer is: Income level of group members

Group health insurance premiums are typically influenced by various factors that assess the overall risk associated with the pool of insured individuals. The average age of group members plays a significant role because older individuals generally have higher healthcare costs. Health status is a critical consideration as well; groups with members who have pre-existing conditions may incur higher costs due to increased medical care needs. The size of the group also affects premiums; larger groups tend to have a more diversified risk, which can lead to lower premiums per individual. In contrast, the income level of group members is generally not a direct factor in determining group health insurance premiums. Insurance pricing is primarily concerned with the likelihood and cost of claims rather than the income of the people being covered. This distinction is important for understanding how health insurance risk assessments are made in group policies.