Subsidization in insurance pools occurs if a 40-year-old male is charged the same life insurance premium as a 20-year-old male.

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Quizplus · Accepted Answer

Subsidization occurs because the 40-year-old male typically poses a higher risk to the insurer than the 20-year-old male, so charging them the same premium means the lower-risk individual is effectively subsidizing the cost for the higher-risk individual.

Subsidization in Insurance Pools Occurs If a 40-Year-Old Male Is