To Prevent the Moral Hazard Problem,health and Life Insurance Companies

question 30

Multiple Choice

To prevent the moral hazard problem,health and life insurance companies may write policies

• A) for which premiums increase dramatically once the policyholder is discovered to have contracted an illness.
• B) containing provisions which either reduce or eliminate benefits to persons who contract prespecified illnesses.
• C) limiting the amount the companies will pay in the event that claims are submitted by policyholders.
• D) with all of the above provisions.
• E) with only A and B of the above provisions.

---

Definitions:

Honest Enterprise

A business operation known for its integrity, ethical practices, and transparency in dealings.

Disrespect For Authority

A behavioral pattern characterized by defiance or disobedience towards figures or institutions of power.

Arguing And Conflict

The process of having a disagreement or dispute that may result from differing opinions or interests between individuals or groups.

Economic Depression

A prolonged period of significant decline in economic activity across the economy, characterized by high unemployment, low consumer spending, and financial instability.