Final answer:
Unfair discrimination refers to charging different rates to individuals of the same class and equal expectation of life, which is illegal in insurance terms.
Step-by-step explanation:
Charging different rates and premiums for any contract of life insurance, annuity, dividends, or other benefits to individuals of the same class and equal expectation of life or any other terms and conditions of the contract is called Unfair discrimination. This practice is illegal and goes against the principles of actuarial fairness, where premiums should be set according to the average amount of benefits for a person in a given risk group. In the context of life insurance sales, when an insurance company cannot differentiate applicants based on their risk levels due to lack of information (such as family cancer history), they may set a uniform premium for all applicants, which would still aim to be actuarially fair based on the average risk of the entire group. This helps prevent adverse selection, where only those expecting to need the insurance would purchase it while others would opt-out, potentially leading to market instability.