Final answer:
A policy that covers multiple people under a single master contract issued by an employer or associated group is known as a Group Policy. This policy is part of employment-based insurance and distinct from individual or self-funded policies. It must account for claims, administrative costs, and profits, aligning with the fundamental law of insurance.
Step-by-step explanation:
A policy that covers a number of people under a single master contract issued to the employer or to an association with which they are affiliated is usually called a Group Policy.
This type of policy is distinct from an Individual Policy, which is obtained by one person and covers only them or their family, and from a Self-funded Policy, where the employer assumes the financial risk for providing health care benefits to its employees.
A Group Policy is a form of employment-based insurance, which is a health plan coverage that is provided in whole or in part by an employer or union and can cover just the employee or the employee and their family as opposed to direct-purchase insurance coverage that an individual buys directly from a private company.
In the world of private insurance and considering the fundamental law of insurance, the average person's payments into the insurance over time must adequately cover the average person's claims, the costs of running the company, and leave room for the firm's profits.
This reflects the natural balancing act in insurance markets to equate premiums with the expected cost of claims across different risk groups while also maintaining actuarial fairness. Risk groups share roughly the same risks of an adverse event occurring.