Insurance companies are able to offset the adverse selection in markets for life insurance by:
A) requiring premiums that are above the expected value of receipts.
B) only insuring people who appear to be sick.
C) insuring a wide variety of people so that gains on some policies offset losses on others.
D) requiring medical exams from people whom they insure.
E) requiring higher premiums from healthy people than from sick people.

Question

Quizplus · Accepted Answer

The Answer of Insurance companies are able to offset the adverse selection in markets for life insurance by:
A) requiring premiums that are above the expected value of receipts.
B) only insuring people who appear to be sick.
C) insuring a wide variety of people so that gains on some policies offset losses on others.
D) requiring medical exams from people whom they insure.
E) requiring higher premiums from healthy people than from sick people.

Insurance Companies Are Able to Offset the Adverse Selection in Markets