Final answer:
The actuarially fair premium would vary between groups with different cancer history risks if priced separately, but as a single group, the premium would be an average reflecting combined risk. Insurance companies can negotiate lower health care rates, saving money for themselves and consumers. Health insurance costs, such as deductibles, co-insurance, and co-payments, affect individual financial obligations and overall premium settings.
Step-by-step explanation:
When considering the pricing of life insurance premiums by an insurance company, actuarially fair premiums are calculated to match the risk profile of individual or groups of policyholders. If premiums were calculated for separate groups with different risk factors — such as family cancer histories — the premiums would reflect the risk associated with each group. However, when an insurance company offers life insurance to an entire group without knowledge of individuals' family cancer histories, they must determine an average premium that accounts for the entire group's combined risk.
Insurance companies, due to their large client base, have the leverage to negotiate with health care providers for lower service rates — a concept known as insurance negotiation benefits. This creates a cost-saving benefit for both consumers and the insurance company itself when paying out claims. The cost structures of health insurance, including deductibles, co-insurance payments, and co-payments, also impact individual financial responsibilities and risk mitigation strategies of both consumers and insurance providers, influencing the overall premium calculations.