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:
A)adverse selection.
B)agency costs.
C)administrative and overhead costs.
D)taxation of insurance payments.

Question

Quizplus · Accepted Answer

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 all market imperfections that can contribute to an increase in the cost of insurance.

In Reality,market Imperfections Exist That Can Raise the Cost of Insurance