Because Kevin Has a History of Back Problems, His New

question 35

Multiple Choice

Because Kevin has a history of back problems, his new health insurance plan will not cover any back-related injury until his policy has been in place for 12 months. This practice, which will not be legal as of 2014, is known as a(n)

• A) exclusionary coverage approval.
• B) preexisting condition clause.
• C) lifetime limit.
• D) denial of coverage.

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Definitions:

Expected Loss

The anticipated amount of loss a party might suffer in an investment or venture, taking into account the likelihood of various outcomes.

Probability

The likelihood of a particular event happening.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.

Taxi Driver

An individual who operates a car for hire to transport passengers as a profession.