Final answer:
The conversion from a term policy to a whole life policy is usually allowed without providing evidence of insurability. Actuarially fair premiums depend on the risk, which would be higher for groups with a known family cancer history compared to those without when sold separately. If sold as a group without knowledge of cancer history, the premium reflects an average risk for the whole group.
Step-by-step explanation:
The individual policy conversion that is usually permitted without any evidence of insurability is: Conversion from a term policy to a whole life policy. This type of conversion allows an individual to convert their term life insurance, which provides coverage for a certain period, into a whole life policy, which covers the insured for their entire lifetime. Conversion policies typically allow this without the need to prove insurability, meaning no medical exams or health questions are required at the time of conversion.
Actuarially fair premiums are calculated based on the risks associated with insuring individuals or groups. For example, when selling life insurance separately to each group with known family cancer histories, premiums would be higher for those with a history of cancer due to the increased risk. If the insurance company cannot ascertain cancer histories and must insure the entire group, the premium would reflect an average risk and could be higher for those without a family history of cancer, but lower for those with such history, compared to if separate premiums were calculated.