Essentially, a moral hazard is an insurance and financial concept about how having insurance can impact behavior. People may take on more risk than they usually would if they seemingly have a safety net in place. While it may seem morbid, this principle applies with regard to life insurance. For example, an individual who is the sole provider for their family may shy away from risky actions since they know the financial impact the loss of their income would have. However, people in similar economic circumstances may not have that concern if they have a substantial life insurance policy.