Question

All of the following statements regarding insurance policies are correct EXCEPT:

	A) Adverse selection is the tendency of those that most need insurance to purchase insurance policies while those with the least perceived risk are less likely to pay the necessary premiums for insurance.
	B) An endorsement is a modification or change to a life or health insurance policy.
	C) Co-payments are loss-sharing arrangements whereby the insured pays a flat dollar amount or percentage of the loss in excess of the deductible.
	D) Deductibles serve as motivation for an insured to take precautions to avoid losses or to prevent the filing of false claims.

Answer 1

D) Deductibles serve as motivation for an insured to take precautions to avoid losses or to prevent the filing of false claims

A deductible helps in mitigates the risk as the policyholder is now responsible for the portion of costs. In fact, the deductibles will serve as to the align interests of insurer and a insured therefore the both parties will seek to mitigate risk of the catastrophic loss.