PearsonVue Health Insurance Practice Exam

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What is a risk retention group in health insurance?

An entity formed by a group of businesses or organizations to pool and manage their own insurance risks

A risk retention group is defined as an entity formed by a group of businesses or organizations to pool and manage their own insurance risks. This arrangement allows members to share the financial burden of losses collectively, often leading to more manageable premiums and greater control over their insurance decisions. By coming together, these businesses can customize their coverage to better fit their specific risk profiles, which is particularly beneficial for niche sectors or industries with unique risk exposures.

The establishment of a risk retention group is typically governed by the Liability Risk Retention Act, enabling members to handle liability insurance more effectively. Members benefit not only from shared costs but also from the collective knowledge and expertise within the group, which helps them to make informed decisions about risk management and insurance needs.

A type of insurance policy for personal health risks

A government program for low-income individuals

A mutual insurance company that only covers specified risks

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