How does a master contract function in group insurance?

A master contract in group insurance serves to insure multiple individuals under a single policy framework. This structure allows an employer or an organization to provide insurance coverage to a group of people, such as employees or members, often with simplified underwriting processes and collective benefits that typically lead to lower premiums than individual policies.

This approach is beneficial because it streamlines the administration of insurance for organizations, allowing them to manage coverage for potentially large numbers of individuals efficiently. Rather than requiring each member to undergo individual underwriting, which can be time-consuming and costly, the group as a whole is typically assessed. This group assessment often makes it possible for individuals who may have pre-existing health issues to obtain coverage that they might not be able to secure on an individual basis.

The other choices are not aligned with the function of a master contract. Individual insurance is not covered under a master contract, as the focus is on group coverage. Individual underwriting is largely less prevalent in group insurance due to the collective nature of the contract. Lastly, while it can include high-risk groups, this is not a defining characteristic of a master contract; rather, it aims to provide broader access to insurance solutions regardless of the group's risk factors.