What does the concept of "shared risk" imply in group insurance?

In group insurance, the concept of "shared risk" primarily involves the pooling of risks among all members of the group. This means that the overall risk faced by the insurance provider is distributed across a larger number of individuals rather than being concentrated on one person. As a result, individuals within the group benefit from lower premiums because the costs associated with claims are shared among all insured members.

This arrangement not only reduces individual financial responsibility but also enhances the group’s overall stability against unexpected losses. When a risk is shared in this way, it helps to ensure that insurance remains affordable and accessible for all members, regardless of their individual risk levels. Thus, the total risk is mitigated, and the collective contribution helps cover potential claims, creating a beneficial outcome for the group as a whole.

The other options do not accurately represent the principle of shared risk in group insurance, as they suggest exclusion or uniform payment regardless of risk, which contradicts the fundamental principle of risk sharing that characterizes group insurance plans.