What typically differentiates a group policy from individual health insurance?

The key characteristic that differentiates a group policy from individual health insurance is the concept of shared risk. In group health insurance, the risk is spread over a larger number of people, typically members of an organization, such as employees of a company or members of an association, which allows for more predictable costs and often results in lower premiums. The pooling of risk among a diverse group means that while some individuals may utilize more health care services, others will use less, balancing out the overall costs for the insurer.

In contrast, individual health insurance policies are underwritten based on the specific health risks of the individual, which can lead to higher premiums, especially for those with pre-existing conditions. Since the risk in individual insurance is based solely on one individual's health status, there is less opportunity for risk sharing.

Additionally, group policies often have more lenient underwriting guidelines compared to individual policies. Individual insurance typically involves more thorough medical evaluations and assessments, which can further distinguish the two types of insurance.

Overall, the shared risk inherent in group policies is a fundamental aspect that allows for their unique pricing and coverage structures compared to individual health insurance.