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that the high volume nature of the product means that the risk is spread widely enough to prevent any "anti-selection" risk.

For funeral cover a low sum at risk is coupled with a low premium. While easily affordable to the insured, the premium is actually expensive in relation to the actual risk. The margin for the insurer could be as much as 100%. As the product is a standard "off-the-shelf" offering, administrative and other expenses are low.

Group life schemes are generally put in place for companies and retirement funds. Usually all (or most) members are covered at a blanket rate without medical underwriting. Again, the risk is spread across a large population. In some cases medical underwriting may be required for high earners or those over a cut-off age. The insurer simply needs to cover the risk in terms of the mortality of the general population falling within a specific age range. Again, this type of scheme involves low costs.

For individual life cover where there is no medical exam or medical questionnaire - be careful. This type of insurance may be offered on a high volume basis for low risk amounts. As with funeral cover, the premium seems low but is actually much more expensive than a similar product where medical information is required.

As always, before taking out life insurance get quotes and look carefully at the conditions. Mass marketed life insurance options are usually very expensive.

Learn more about this author, Barry Marcus.
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