Self-selection
Definition of "Self-selection"
Effort of a poor risk to seek insurance coverage. The onset of a health problem such as heart disease, for example, may prompt a person to apply for life insurance before seeking medical treatment. Such applicants, if not screened out, would weight the insured pool toward bad risks. The underwriting process is intended to counter the natural tendency toward self-selection among insurance applicants, either by requiring higher rates for poorer risks or by denying them coverage.
Popular Insurance Terms
Plan under which an employee authorizes his or her employer to deduct from each paycheck premiums due on an insurance plan. ...
Frequency of premium payment; for example annually, semiannually, quarterly, or monthly. ...
Proceeds from a life insurance policy paid on a monthly basis instead of in a lump sum. ...
Association of life insurance companies focusing on legislation and public relations that may affect the life insurance business on federal, state, and local levels. Membership is composed ...
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Judgment decision by the insurance agent concerning whether or not to submit an application. The decision is based on the agent's familiarity with the insurance company's underwriting ...
Premium charge for a policy that is going to be in force for less than the normal period of time. ...
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