In life insurance, which term refers to the overall risk of loss across a group of insured individuals?

Pooling risk is a fundamental concept in life insurance that involves the aggregation of risk among a group of insured individuals. By bringing together many policyholders, an insurance company can statistically estimate the overall risk of loss due to death. This allows the insurer to spread the financial risk of claims over a larger number of policies, making it more manageable.

When risks are pooled, the insurer can collect premiums from many individuals, with the understanding that only a small percentage of them are likely to experience a loss in any given period. This collective approach is what enables insurance companies to offer coverage and pay claims while remaining financially viable.

Other terms that were provided have specific meanings but do not define the collective risk aspect as clearly. Ultimate mortality, for example, refers to the end of life expectancy and mortality rates, while morbidity pertains to the incidence of disease or disability within a population. Exposure concerns the measure of risk related to the individuals or policies that are in force but does not encapsulate the broader concept of risk pooling seen in life insurance. Thus, pooling risk is the most accurate choice for describing the overall risk of loss across a group.