What is a key difference between group insurance and individual insurance?

The answer centers on the benefits associated with group insurance, specifically regarding premiums. Group insurance premiums are generally lower than individual insurance premiums because the risk is spread out over a larger pool of individuals. In a group insurance plan, the collective number of insured individuals allows insurers to offer discounted rates due to the reduced risk per individual and lower administrative costs associated with managing a single policy for multiple members.

The other factors, such as coverage options and flexibility, often favor individual insurance plans. Individual policies usually provide more customization and a broader range of coverage selections tailored to personal health needs. Furthermore, benefit limits can vary widely in both types of insurance, but group plans often have standardized limits which may not necessarily be higher for group coverage compared to individual plans. Thus, the reduction in premiums is a distinctive advantage of group insurance that reflects its wider applicability and diversified risk pool.