Life insurance companies often give applicants a physical examination to prevent

Question

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Life insurance companies give applicants a physical examination to prevent adverse selection, which occurs when individuals with a higher risk of death are more likely to apply for life insurance. By conducting a physical examination, the insurance company can evaluate an applicant's health status and determine the appropriate premium to charge. This helps mitigate the risk of insuring individuals who are more likely to die, which reduces the potential financial losses of the insurance company.

Life Insurance Companies Often Give Applicants a Physical Examination to Prevent