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Adverse Selection
(redirected from Anti-Selection)

   Also found in: Medical, Wikipedia 0.01 sec.
Adverse selection
Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality.

Adverse Selection
A sociological phenomenon in which those persons with the most dangerous lifestyles or careers are the most likely to buy life insurance policies. Adverse selection may also occur if those persons conceal or falsify relevant information when they apply for the insurance policy. This has the potential of economic hardship for life insurance companies because those most likely to receive a death benefit are the ones buying policies. This reduces profit potential. Life insurance companies attempt to counteract adverse selection by limiting coverage and/or raising premiums. Adverse selection is also called antiselection.


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Employee vouchers for Increases potential of exchange anti-selection.
Granting open enrollment when there is no material change in the benefit design may lead to anti-selection, Similarly, granting an open enrollment request on an in-force case with liberal guarantee issue terms can easily result in adverse experience.
Because a smaller percentage of employees generally participate in voluntary plans, and those employees pay a higher share of their premiums than on an employer-paid plan, the risk of anti-selection increases on a voluntary plan.
 
 
 
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