What is a key characteristic of individual insurance?

Individual insurance is characterized by its focus on personal risk assessments rather than group risk assessments. In this type of insurance, the coverage is tailored to the needs and circumstances of the individual policyholder. Each policy is underwritten based on the individual's health history, lifestyle, and other personal factors, which allows for a more precise evaluation of risk.

When insurance is individualized, the risk is effectively transferred from a broader group to a single individual. This characteristic shapes how premiums are determined and how coverage is extended. Because the assessment is based on personal risk rather than a generalized group profile, premiums can vary significantly based on individual factors, leading to a more customized insurance solution.

In contrast, options that refer to group risk assessments or collective coverage pertain to group insurance plans, where risks are pooled among many individuals. Therefore, understanding the distinction between individual and group insurance is crucial to grasping how personal policies operate in the insurance marketplace.