When a Fraternal Insurer Began Operations,it Asked Each Member,regardless of Age,to

question 32

Multiple Choice

When a fraternal insurer began operations,it asked each member,regardless of age,to pay $20 per month to the fraternal's group life insurance plan.In exchange,each member received the same amount of life insurance.Soon younger members of the group began to drop out when they realized their premiums were subsidizing the older workers who had a higher chance of loss.Which important underwriting principle was violated in this case?

• A)An underwriting profit should be attained.
• B)Moral hazard should be avoided.
• C)Insureds should be selected according to underwriting standards.
• D)There should be equity among policyholders.

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Definitions:

Chromosomes

Structures within cells that contain DNA and protein, playing a key role in inheritance by carrying genes.

Single Cell

An organism or the basic structural unit of an organism that consists of only one cell, exemplifying both unicellular organisms and the cellular basis of multicellular life.

Avery, MacLeod, McCarty

A scientific team that demonstrated DNA as the substance responsible for transferring genetic information, laying groundwork for modern molecular biology.

Transforming Substance

A factor or component that induces change or transformation in a substance, often used in context with genetic material.