Final answer:
Agents provide the effective date of coverage at the time of application or receipt of premium moneys. Actuarially fair premiums depend on detailed risk assessments, which would require a blended rate for a group without specific risk information like family cancer histories, potentially leading to adverse selection.
Step-by-step explanation:
When a life agent, a property broker-agent, or a casualty broker-agent must provide to all insureds or applicants the effective date of coverage, it is typically required at the time of application or receipt of premium moneys. This stipulation ensures that the insured is aware of when the coverage begins and is a standard practice across the insurance industry. It is important for agents to communicate this information promptly and clearly to applicants to avoid any misunderstanding regarding the start of coverage.
The actuarially fair premium for each group, if the insurance company were selling life insurance separately, would depend on the risk assessment of each group considering various factors, including health, family history of diseases like cancer, lifestyle, and occupation. Without knowledge of family cancer histories, for the premium of the group as a whole, the insurer would have to consider a blended rate based on the average risk of the entire pool of applicants, which may result in a higher premium for low-risk individuals and a lower premium for high-risk individuals. This is due to the concept of adverse selection, where the lack of specific risk information leads to a less efficient market for insurance.