15. If a life insurance company accepted all application with no medical underwriting and changed all...

15. If a life insurance company accepted all application with no medical underwriting and changed all sured the same price for a 500,000 life insraucne policy and there were no exclusions other than the suide clause, what would be the most likely result?

A. This company would prosper due to marketing genius

B. This company would invest in high grade bonds

C. This company would become insolvent due to moral hazard

D. This company would become insolvent due to adverse selection

Solutions

Expert Solution

D. This company would become insolvent due to adverse selection. It is very likely that the company will become insolvent because it did not filter out the insurers on health conditions and or other adverse conditions.

jeff jeffy answered 2 years ago

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