Adverse Selection
Definition of "Adverse selection"
Process in life insurance by which an applicant who is uninsurable, or is a greater than average risk, seeks to obtain a policy from a company at a standard premium rate. Life insurance companies carefully screen applicants for this reason, since their premiums are based on policyholders in average good health and in non-hazardous occupations.
Popular Insurance Terms
Income averaged over a specified period of years. For example, to calculate benefits in a pension plan, it is common to average the highest three years or five years of earnings. ...
Portion of the federal tax code outlining the procedure by which a corporation cancels or redeems its shares with funds paid out of earnings or profits, thus making the distribution a ...
Document used to sign up employees for plans such as salary savings, life insurance, or other employee benefits. ...
In insurance, independent advisor who specializes in pension and profit sharing plans. Usually a licensed insurance agent. ...
Insurance policies covering various business risks. ...
LIFE INSURANCE: specification by each state regarding the minimum assumptions that must be used in reserve calculations as theypertain to the maximum interest rate that can be assumed; ...
Variation of group life insurance that covers a small group of persons who work for the same employer. With group life insurance, the employer owns the policy; with wholesale insurance, ...
A contract sold by insurance companies that is bought by means of a single lump sum payment usually providing a monthly income payment for the annuitant's life. The amount of the monthly ...
Central (main) office of an insurance company whose facilities usually include actuarial, claims, investment, legal, underwriting, agency, and marketing departments. ...
Have a question or comment?
We're here to help.