Final answer:
The Group Life underwriting risk selection process protects insurance companies from c) adverse selection by classifying potential clients into risk groups and pricing premiums accurately.
Step-by-step explanation:
The Group Life underwriting risk selection process helps protect insurance companies from c) adverse selection.
Adverse selection is a situation where insurance buyers, who know more about their health risks than the insurance company, may purchase more insurance if they are high-risk without the insurer knowing their true risk levels.
To mitigate this, insurers use risk selection practices to more accurately determine the risk profile of potential clients and appropriately price premiums.
This strategy helps ensure that the insurance pool remains sustainable by preventing an imbalance where high-risk individuals disproportionately benefit at the expense of the insurer and potentially other policyholders.
Laws and regulations may also influence this process to ensure a fair and functional insurance marketplace.