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
State that increases the probability of a loss. For example, storage of flammable material next to a furnace in one's home increases the hazard with the knowledge of an insured, and is ...
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Program through which employees purchase individual life insurance and disability income insurance by having the employer reduce their income by the required insurance premium. Since the ...
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Frequency of premium payment; for example annually, semiannually, quarterly, or monthly. ...
Measure of the sensitivity of the insurance company's liability for the resultant higher expense rates than charged for in the premium. ...
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