Final answer:
Making fraudulent statements to acquire insurance benefits is known as insurance fraud. It is a serious crime that undermines the principle of risk-sharing in insurance and can lead to increased premiums and a rise in moral hazard.
Step-by-step explanation:
Anyone who makes a fraudulent statement on an insurance application in order to obtain money benefits from an insurance company has committed an act of insurance fraud. Insurance is the sharing of risk where individuals pay premiums and receive compensation if the insured event occurs. In an environment with imperfect information, insurers might not be able to charge actuarially fair premiums, and this could lead to different premiums for different groups. Moral hazard is a related concept where individuals with insurance have less incentive to avoid risks. For example, the case of Wells Fargo's CEO John Stumpf demonstrates how financial institutions can commit fraud without individuals necessarily facing severe consequences.