Final answer:
Besides buying life insurance directly, benefits can be acquired through employment, memberships, inheritances, associated policy riders, and investment or retirement plans. Moral hazard presents a challenge where individuals may hide information impacting their risk profiles. An insurance premium is the amount paid for coverage, and actuarially fair policies accurately reflect the insured risk.
Step-by-step explanation:
Life Insurance Benefits Beyond Purchasing a Policy
Aside from buying life insurance, individuals might have a life insurance benefit through other avenues such as employer-provided group life insurance plans, credit unions that offer life insurance as a member benefit, or through organizations they're a part of which provide life insurance as a perk to their members. Additionally, some people may inherit life insurance benefits as beneficiaries of a policy taken out by someone else, or they might have coverage as a rider on another policy, such as a spouse's life insurance plan. Finally, certain investment accounts or retirement plans may include a component of life insurance coverage as part of their benefits.
Moral Hazard and Insurance Information
One of the key challenges in the insurance industry is the problem of moral hazard, which occurs when there is a disconnect between the individual's behavior and the risk to the insurer. For example, a person with life insurance may not disclose the full extent of their family's health history, creating a situation where the insurer has imperfect information. Similarly, a high-risk driver might not have had a major accident yet, making it hard for the car insurance company to accurately assess the actual driving risk.
Additional Concepts
An insurance premium is the amount paid by an individual or a business for an insurance policy. In an insurance system, it is more likely that the average benefits paid will equal the average premiums paid, rather than each person receiving benefits proportional to their own premiums. An actuarially fair insurance policy is one in which the premium reflects the true risk of the insured event occurring. The issue of moral hazard pertains to situations wherein individuals change their behavior because they do not bear the full consequences of the risks they take, such as when insured parties engage in riskier behavior than they would without insurance.