[amp_mcq option1=”The possibility that client would undertake dangerous expeditions after taking a policy” option2=”The possibility of ending own life or the life of another” option3=”Both the above instances” option4=”None of the three” correct=”option3″]<\/p>\n
The correct answer is: C. Both the above instances<\/strong><\/p>\n Moral hazard is a situation where a person’s actions are influenced by the fact that they are insured against the risk of those actions. In the context of life insurance, moral hazard could lead to a client taking on more risks, such as engaging in dangerous activities, because they know that they will be compensated if they are injured or killed.<\/p>\n Moral hazard can also occur in the context of health insurance, where a person may be more likely to engage in risky behaviors, such as smoking or drinking excessively, because they know that they will be covered by their insurance if they develop health problems as a result of those behaviors.<\/p>\n Moral hazard is a significant problem for insurers, as it can lead to higher premiums for all policyholders. Insurers try to mitigate moral hazard by carefully screening applicants for insurance and by including clauses in their policies that limit coverage for certain types of risks.<\/p>\n A. The possibility that client would undertake dangerous expeditions after taking a policy is an example of moral hazard. If a client knows that they are insured against the risk of death or injury, they may be more likely to engage in dangerous activities.<\/p>\n B. The possibility of ending own life or the life of another is also an example of moral hazard. If a client knows that they are insured against the risk of death, they may be more likely to take their own life or the life of another.<\/p>\n D. None of the three is not the correct answer. Both A and B are examples of moral hazard.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”The possibility that client would undertake dangerous expeditions after taking a policy” option2=”The possibility of ending own life or the life of another” option3=”Both the above instances” option4=”None of the three” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[],"class_list":["post-32560","post","type-post","status-publish","format-standard","hentry","category-insurance","no-featured-image-padding"],"yoast_head":"\n