Respuesta :
The difficulties that the insurance companies are aiming to address are moral hazard and adverse selection. B is the best choice as a result.
What is insurance?
A party undertakes to ensure another party compensation in the event of a certain loss, damage, or injury in exchange for a fee as a way of financial loss protection. It is a method of risk management that is mostly applied to protect against the risk of a potential loss that may or may not occur.
It ensures the insured person obtains everything is legally required for them to regain their sanity and make decisions .A new beginning that makes up for all losses.
According to the theory of adverse selection, insurance buyers are more inclined to choose bad risks than good ones. Having insurance can change one's behavior, which is a phenomena known as moral hazard. If one had insurance, they might act carelessly.
Is insurance a useful thing?
Because permanent life insurance can generate cash value or be converted into cash, depending on the type of policy and how it is used, it may be seen as a financial asset. In other words, the majority of permanent life insurance contracts have the capacity to accumulate monetary value over time.
Adverse selection and moral hazard are the issues that the insurance companies are attempting to address because only those who are confident in their ability to drive safely will buy this insurance.
As a result, choice B is suitable.
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