Final answer:
Insurers in Kansas are required to submit their advertising materials to the Kansas insurance department, which includes all public communications. An actuarially fair premium reflects the risk profile of the insured, varying between separate groups or averaged if no individual risk information is available.
Step-by-step explanation:
When an insurer in Kansas wants to advertise, they must submit their advertising materials to the Kansas insurance department. These materials include any information that will be disseminated to the public, such as electronic media, print ads, and brochures, to ensure adherence to regulatory standards and consumer protection laws.
The actuarially fair premium is a concept that refers to a premium that correctly reflects the risk of the insured event occurring. If an insurance company is selling life insurance separately to groups with different risks (e.g., based on family cancer histories), the actuarially fair premium would vary for each group according to their respective risks. Group One with a higher risk of cancer would have a higher premium compared to Group Two with a lower risk.
In contrast, if the insurer offered life insurance to the entire group without knowledge of their cancer histories, the actuarially fair premium would be averaged over the combined risk of all members. This could result in adverse selection if members with higher risk are more likely to purchase insurance, causing potential losses for the insurance company.