What is evidence of insurability primarily used for in group plans?

• A. To manage enrollment timing
• B. To determine premiums for dependents
• C. To assess employee health status
• D. To prevent adverse selection

Answer: (D)

Evidence of insurability is about collecting health information to determine if someone is eligible for coverage and, if so, on what terms. In group plans, its primary purpose is underwriting to prevent adverse selection: if high-risk individuals could join or obtain large amounts of coverage at the same time, the plan’s costs would rise for everyone. By requiring health information for certain enrollments or higher coverage, the insurer protects the pool from becoming disproportionately risky, helping keep premiums stable for the group. It isn’t mainly about timing enrollments or setting premiums for dependents, and while health status is part of underwriting, the key goal here is preventing a high-risk enrollment surge that could disrupt the plan.