Given the requisites of risk pooling, which of the following exposures would make the best subject of a profitable insurance pool? Assume a premium appropriate to the exposure is charged and analyze the exposure from the insurer's standpoint.
A) Insuring all the lives of college seniors in the U.S. for $10,000 each, without an initial medical exam
B) Insuring college students against their GPA falling below a 3.0
C) Insuring all the dorms on a single college campus against property damage
D) Insuring students against the theft or disappearance of textbooks

Question

Quizplus · Accepted Answer

Insuring all the lives of college seniors in the U.S. for $10,000 each, without an initial medical exam, is the best option for a profitable insurance pool because it involves a large, diverse group with a low probability of the insured event (death) occurring within the policy term. This allows the risk to be spread over a large number of individuals, making it more predictable and manageable for the insurer.

Given the Requisites of Risk Pooling, Which of the Following