General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
After enrolling in a comprehensive health plan, an insured begins skipping preventive screenings and delays seeing a doctor, assuming the plan will cover whatever develops. This behavior is best classified as:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A morale hazard is carelessness or indifference that develops because insurance protection exists - the insured lets down guard, assuming coverage will absorb the consequences. Skipping screenings because the plan will pay for treatment is exactly that. A moral hazard involves intentional dishonesty such as a fraudulent claim, a physical hazard is a tangible condition, and a peril is the actual cause of loss.
Why the other options are wrong
- B) The behavior is negligent and indifferent, not intentionally dishonest, so it is not a moral hazard.
- C) No tangible condition is described; the insured's attitude is the hazard.
- D) A peril is the event that causes the loss, such as the illness itself.
Memory hook
Morale = relaxed because covered. Moral = scheming. Physical = a real condition.