Which of the Following Is an Example of Adverse Selection

question 11

Multiple Choice

Which of the following is an example of adverse selection?

• A)A homeowner with a large fire insurance policy allows the wiring in her house to deteriorate.
• B)A woman with a large life insurance policy takes up sky diving.
• C)Your brother-in-law borrows $20,000 from you to open a pizza parlor, but spends it gambling at the racetrack instead.
• D)A man with a bad heart condition buys a large life insurance policy.

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Definitions:

Benefited The Public

Actions or policies that have a positive impact on society or the community at large.

Limited Purposes

Activities or objectives that are restricted in scope or extent, often specified in legal documents or contracts.

Minimum Contacts

A criterion used to determine if a defendant has sufficient connections to a jurisdiction to justify being subject to its laws and courts.

Traditional Notions

Established or customary beliefs, principles, or practices that have been accepted over time.