What is a key characteristic of personal insurance compared to group insurance?

A key characteristic of personal insurance, compared to group insurance, is that it typically comes with higher premium rates. This difference primarily arises because personal insurance policies are usually tailored to individual needs and health profiles, which means insurers assess risk at a more granular level. Since they underwrite based on the specific individual’s health history, lifestyle, and other personal factors, the premiums are often higher in order to cover the potential costs.

In contrast, group insurance policies are generally less expensive per person because the risk is spread across a larger pool of individuals. Employers or organizations often subsidize group plans, thus reducing the financial burden on participants. Additionally, the policy benefits in group insurance are usually more standardized, leading to lower costs due to economies of scale in how the insurers manage risk.

While other characteristics like having no restrictions on healthcare providers or benefits being predetermined may apply in certain situations, these do not consistently differentiate personal insurance as distinctly as premium rates do. Hence, the higher premium rates in personal insurance serve to highlight the risk management strategies employed by insurers for individual policies.