Adverse Selection Occurs When

question 14

Multiple Choice

Adverse selection occurs when

• A) a person takes more risks that are not known to the life insurance company because he has life insurance.
• B) a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company.
• C) a person is a risk lover.
• D) pregnant women with health insurance make more doctor visits than uninsured pregnant women.

---

Definitions:

Equilibrium Constant

A number that expresses the ratio of products to reactants at equilibrium for a chemical reaction, indicating the extent of the reaction.

Ammonia

A colorless gas with a characteristic pungent smell, consisting of nitrogen and hydrogen (NH3), used as a fertilizer and cleaning agent.

Catalyst

A material that accelerates the speed of a chemical reaction without experiencing any lasting chemical alteration.

Acid Equilibrium

The state of balance between the forward and reverse reactions in which an acid donates a proton to a base.