Final answer:
The Consideration clause in a Life or Health policy typically includes the amount of insurance coverage provided. It defines the premium that the insured must pay and the benefits the insurer agrees to provide. This clause is fundamental to the insurance contract and addresses premium, coverage, and moral hazard concerns.
Step-by-step explanation:
The Consideration clause of a Life or Health policy typically includes the amount of insurance provided (D). This clause is an integral part of the contract where the insured agrees to pay a premium, and in return, the insurance company agrees to pay a specific benefit upon the occurrence of a particular event, such as the death of the insured in the case of life insurance policies. The premium is the money paid for the insurance policy, which can be scheduled in various payment frequencies such as monthly, quarterly, or annually.
An actuarially fair insurance policy is one where the premium matches the expected payouts; however, insurance operates under the principle that not everyone will receive benefits equal to their premiums. Instead, the average benefits paid out are designed to match average premiums. The moral hazard becomes a concern in insurance systems, which refers to the risk that an insured party may not act in good faith or may take additional risks because they are insured.