For each item or event in the table below, select the best description/explanation from the following list and enter the corresponding number in the table. Provide a brief explanation for each answer

1. Adverse selection

2. indemnification

3. moral hazard

4. morale hazard

5. loss control

6. peril

7. pooling

8. underwriting

9. law of large numbers

10. contract of adhesion

11. pure risk

12. insurable interest

1. Your 10-year-oldFor vehicle is destroyed in a collision. A new Ford cost $20,000, but the insurance company only pays you $2,000.

2. A life insurance company offers key person insurance for important employees, so I purchase a life insurance policy on the life of one of my key engineers. Three years after the engineer stops working for my company, she dies. I contact the life insurance company they pay me the face value of the policy.

3. Bob is 25 years old and healthy, so he decides not to purchase health insurance because it is so expensive. After Bob is diagnosed with a rare type of cancer, he takes advantage of the Affordable Care Acts elimination of pre-existing conditions exclusions and purchases health insurance. The insurance company pays for his cancer treatment.

4. When applying for health insurance one of the questions is Are you good in health? Despite being HIV positive, I answer, yes because I currently have no symptoms. Six months later I develop AIDS and the insurance company refuses to pay for my treatment. I sue the insurance company and the insurance company is forced to pay because the application did not specifically ask about HIV, but rather was ambiguous about the meaning of in good health.

5. When I bought my first new car, I had $2,000 deductible for part D of my auto insurance and carefully parked my car at least two parking spot spaces away from any other vehicles to try and prevent my body damage. With my current new car, I have fantastic part D coverage with only a $50 deductible. Now I squeeze into the parking space closest to my destination.