In reality market imperfections exist that can raise the cost of insurance above the actuarially fair price and offset some of these benefits.These insurance market imperfections include all of the following except

Question

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Taxation of insurance payments is not an insurance market imperfection that can raise the cost of insurance above the actuarially fair price. Adverse selection, agency costs, and administrative and overhead costs are the imperfections that can contribute to higher insurance prices.

In Reality Market Imperfections Exist That Can Raise the Cost