How Can an Insurance Company Reduce the Adverse Selection Problem

question 143

Multiple Choice

How can an insurance company reduce the adverse selection problem?

• A) The adverse selection problem can't be reduced.
• B) An easy insurance application process could be used,unhealthy individuals could be refused coverage,and large groups of individuals could be insured.
• C) An extensive insurance application process could be used,unhealthy individuals could be refused coverage,and only individuals would be insured.
• D) An extensive insurance application process could be used,hardly anyone would be refused coverage,and large groups of individuals could be insured.
• E) An extensive insurance application process could be used,unhealthy individuals would be refused coverage,and large groups of individuals could be insured.

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Definitions:

Period

An interval of geologic time that is a subdivision of an era; each period is divided into epochs.

Humanitarian Concern

Refers to the care, empathy, and actions taken to improve the welfare and happiness of people, especially those in crisis or need.

Poor People

Individuals or groups living below the poverty line, lacking sufficient financial resources for basic needs such as food, shelter, and healthcare.

Role-taking Opportunities

Chances or situations in which an individual assumes the perspectives or roles of others, enabling empathy and understanding of different viewpoints.