The Use of Deductibles and Coinsurance Are Examples of Attempts

question 25

Multiple Choice

The use of deductibles and coinsurance are examples of attempts by insurance companies to deal with the problem of

• A)moral hazard.
• B)adverse selection.
• C)failure of policyholders to keep paying their premiums.
• D)excessive government regulation.

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Definitions:

Incentive Value

The attractiveness or desirability of a reward or outcome, influencing motivation and behavior.

Set-point Theory

The theory that suggests body weight is regulated at a predetermined, or preferred, level by a feedback control mechanism.

Hedonic Adaptation

The observed process of becoming accustomed to a new situation or stimulus, causing the emotional effects of that stimulus to diminish over time.

Fancy Dinner

An elaborate or formal evening meal, often involving multiple courses and sophisticated cuisine.