Final answer:
The incorrect statement about individual life insurance policies is that they are generally lower than group policies, whereas they actually tend to be higher. Individual policies require evidence of insurability and premiums are determined by age and other risk factors. Actuarially fair premiums require assessing the risk profiles of individuals or groups.
Step-by-step explanation:
The question presented concerns individual life insurance policies and identifying which statement is NOT true. The incorrect statement among the options given is that the policies are generally lower than group policies. In reality, individual life insurance policies tend to be higher in cost when compared to group policies. This is because group policies benefit from the pooling of risks among many individuals which typically results in lower premiums for each policyholder.
In regards to setting premiums based on an individual’s risk factors, such as age or health status, evidence of insurability is often required, which may include a medical exam or health questionnaire. The cost of the insurance plan is indeed determined by the individual’s age, among other factors like health condition and lifestyle, as older individuals are generally more costly to insure due to a higher risk of passing away.
It is essential to note that actuarially fair premiums would be calculated by assessing the risk profile of individuals or groups. If an insurance company cannot access certain information, such as family cancer histories, it would have to set the premium for the whole group based on the available data, resulting in a potential increase in premiums to account for the uncertainty in risk.