Life insurance companies usually require applicants to have physicals and disclose information on their health. This practice is designed to address
A)a principal-agent problem.
B)a moral-hazard problem.
C)a problem involving hidden characteristics.
D)all of the above are correct.

Question

Quizplus · Accepted Answer

This practice addresses a problem involving hidden characteristics, as it helps the insurer assess the risk associated with the applicant's health condition before issuing a policy.

Life Insurance Companies Usually Require Applicants to Have Physicals and Disclose