Which of the Following Insurance Practices Attempts to Minimize the Adverse

question 23

Multiple Choice

Which of the following insurance practices attempts to minimize the adverse selection problem insurance companies face?

• A)prevention of fraud
• B)risk-based premiums
• C)restrictive provisions
• D)deductibles

---

Definitions:

Collateral Contract

A secondary agreement that enhances a primary contract or adds additional terms, and whose breach may provide grounds for legal action separate from the main contract's terms.

Mortgage

A conveyance of property to secure the performance of some obligation, the conveyance to be void on the due performance thereof.

Marriage Consideration

The legal or moral obligations and benefits exchanged between parties upon entering a marriage.

Statute of Frauds

A requirement that certain kinds of contracts be memorialized in writing and signed by the party to be charged, in order to be legally enforceable.