Question

Fund life & health insurance

Explain carefully why this sentence is false.

Suspicious beneficiary designation is an indicator of potential adverse selection problem.

Answer 1

Suspicious beneficiary designation is not an indicator of potential adverse selection problem because adverse selection problem will be those problems when buyers or sellers will be having different informations about the quality of the product and it is not about the suspicious beneficiary because it does not reflect the quality of the product.

Hence, the given statement is FALSE because suspicious beneficiary designation is not an indicator of potential adverse selection problem as it will not be benefitting the buyer or the seller from the point of quality of product.