adverse selection

  • The tendency for poorer risks (or less desirable insureds) to seek insurance, or to continue insurance, or to select options of settlement that are favorable to them, to a greater extent than do good risks.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).