When two brothers apply for life insurance and one is charged a higher rate due to stronger financial standing, this is considered what practice?

The correct answer is discrimination. In the context of insurance, discrimination refers to the practice of treating individuals differently based on certain characteristics or circumstances. When two brothers apply for the same type of insurance and one is charged a higher rate solely based on factors like financial standing, this creates a disparity in the treatment of applicants that can be viewed as discriminatory. Life insurance premiums are often determined by risk assessment factors, including health, age, lifestyle, and financial stability. The decision to charge different rates based on such criteria aligns with discriminatory practices in insurance underwriting, where applicants are judged on their risk levels and other personal circumstances, potentially leading to unfair pricing for individuals even when they may share other similar attributes.

Adverse selection relates to the imbalance that occurs when high-risk individuals are more likely to seek insurance, which is not the primary focus in this scenario. Twisting refers to misleading an insured in an attempt to switch their policy, which is also not relevant here. Controlled business involves agents or brokers selling policies mainly to themselves or their families, another unrelated concept. Understanding these distinctions helps clarify how specific terms apply within insurance practices.