The practice of trying to buy life insurance upon diagnosis of a terminal illness is an example of ________.

Question

Quizplus · Accepted Answer

The practice of trying to buy life insurance upon diagnosis of a terminal illness is an example of adverse selection - the tendency for higher-risk individuals to seek out and purchase insurance at a greater rate than lower-risk individuals. This can create problems for insurance companies, as they may end up paying out more in claims than they collect in premiums. It is not estate planning, profit maximization, or insurance fraud, as the individual is not attempting to deceive or defraud the insurance company.

The Practice of Trying to Buy Life Insurance Upon Diagnosis