Life Insurance

Topics: Insurance, Health insurance, Underwriting Pages: 3 (1053 words) Published: August 18, 2010
Adverse selection is unfavorable selection of the life insurance applicant. The measure that the life insurance company can take to safe guard against adverse selection which is limits on age in sum insured, a medical examination may be required, MAR maybe obtain if it appears that the proposer is trying to conceal and adverse feature or if there is some feature which requires classification. Insurance markets are imperfect and are often characterized by information problems that pose substantial challengers to life and health insurance providers. How to adverse selection and moral hazard complicate the supply of life and health insurance. In my own point, I think in terms of health insurance, adverse selection only purchase health insurance if it benefit to insured. The way adverse selection works if poor health and the insured have more of a tendency to buy a health insurance plan because all bills must be pay by own. Adverse selection fairly good health and therefore don’t find the purchase of a health insurance plan essential. It makes sense to you because visiting the doctor once a year and paying a one-time fee is much more cost effective than making monthly health insurance payments. If you think there is a connection between adverse selection and why health insurance companies check out your medical history during the screening process. Prior to purchasing a health insurance plan, you are generally asked to fill out a lengthy medical history form, in which you answer specific health-related questions such as: •Do you smoke?

How much do you weigh?
What kind of diseases/health conditions run in your family? (High blood pressure, diabetes etc.) •Have you ever been treated for a terminal illness?

Health insurance companies are able to determine whether or not the insured will be a large financial liability to them. Unfortunately, based on that, insured are often either denied coverage or charged with higher premiums rates in order to...
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