How Can an Insurance Company Reduce the Adverse Selection Problem

question 143

Multiple Choice

How can an insurance company reduce the adverse selection problem?

• A) The adverse selection problem can't be reduced.
• B) An easy insurance application process could be used,unhealthy individuals could be refused coverage,and large groups of individuals could be insured.
• C) An extensive insurance application process could be used,unhealthy individuals could be refused coverage,and only individuals would be insured.
• D) An extensive insurance application process could be used,hardly anyone would be refused coverage,and large groups of individuals could be insured.
• E) An extensive insurance application process could be used,unhealthy individuals would be refused coverage,and large groups of individuals could be insured.

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Definitions:

Value Consciousness

The concern for obtaining the best quality, features, and performance of a product or service for a given price that drives consumption behavior.

Consumption Behavior

The study of how individuals select, buy, use, and dispose of goods and services.

Graduate Business Programs

Advanced academic programs offered by universities that focus on business administration, management, and specialized business disciplines at the master's or doctorate level.

Increased Participation

The rise in the number or percentage of individuals involved in an activity, process, or sphere, such as increased public involvement in politics or community services.