The Cost of Group Health Insurance Is Lower Than If

question 151

Multiple Choice

The cost of group health insurance is lower than if an individual buys a policy on his own because

• A)the problem of adverse selection is reduced.
• B)moral hazard costs of a group tend to move to a low average.
• C)it is easier for the company to deny claims from a large group.
• D)insuring a group eliminates the problem of buyers having more information than the seller.

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Definitions:

Compounded Annually

Compounded annually refers to the process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once per year.

Save Each Year

The practice of setting aside a certain portion of income or revenue annually for future use, such as investments or emergency funds.

College Fund

is a savings plan intended to support future college expenses, often established by parents or guardians for their children.

Deposit Today

The act of placing money into a financial account or investment vehicle with the expectation of future returns.