Final answer:
Anti-selection is the term that describes when a policy owner can take unfair advantage of the insurance company by withholding information about their higher risk.
Step-by-step explanation:
The term that describes when a policy owner can take unfair advantage of the company is anti-selection.
Anti-selection occurs when individuals who are at a higher risk prefer to purchase more insurance than those who are at a lower risk. They may withhold information about their higher risk from the insurance company, leading to an imbalance in the risk pool and potentially higher costs for the company.
For example, poorer risks may want to buy more insurance than better risks, which can create adverse selection in the insurance market.