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Fred Bought Life Insurance Five Years Ago

question 37

Multiple Choice

Fred bought life insurance five years ago.He forgot to tell them that he had a heart condition,and,as a result of that condition,he recently died.Which of the following provisions prevents the life insurance company from refusing to pay his beneficiaries because of his original misrepresentation?


Definitions:

External Costs

Costs of an economic activity that are not borne by the participants in the activity but are imposed on others, such as pollution.

Competitive Free Market

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, with prices determined by supply and demand forces.

Marginal External Cost

The cost imposed on a third party not involved in a transaction or activity due to an additional unit of production.

Methane Gas

A potent greenhouse gas with a simple chemical formula CH4, commonly produced by the decomposition of organic materials and digestive processes of animals.

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