menu
Sign up

In Terms of Insurance,which of the Following Statements Is Explained

Question 109
Multiple Choice

In terms of insurance,which of the following statements is explained by adverse selection? A) A person with riskier characteristics tends to be more likely to buy insurance. B) A person who is more risk-averse tends to be more likely to buy insurance. C) Insurance companies charge risk-averse customers a higher premium, since they need more peace of mind. D) None of these statements is true.

Related questions
Q 110
If insurance companies knew how risk-averse their customers were: A) adverse selection would not occur. B) diversification would not occur. C) policies would be perfectly diversified, resulting in lower premiums for everyone. D) risk pooling would not occur.
Q 111
A consequence of adverse selection for the insurance market is that: A) risk-seeking individuals typically pay higher premiums than risk-averse individuals. B) everyone ends up paying higher premiums. C) risk-averse individuals typically pay higher premiums than risk-seekers. D) everyone ends up paying lower premiums.
Q 112
In the context of insurance,everyone typically has to pay a higher premium because of: A) risk pooling. B) diversification. C) risk aversion. D) adverse selection.
logo
© 2020-2021 Cozyplus FZ LLC. All rights reserved