Life Insurance Premiums

Which of the following would not be used to determine the premium rate for a life insurance policy?

Morbidity describes the rate at which illness occurs, and is used to calculate health insurance premiums. Mortality describes the rate at which a specific population dies, and is used to calculate life insurance premiums. The correct answer is: Morbidity

Which of the following best describes the tool underwriters use to determine the rate at which a group of people die?

Mortality tables are used to predict the likelihood of death in a given population. Data in mortality tables is categorized by underwriting factors such as age, sex and smoking habits. The correct answer is: Mortality table

Net single premium is:

Net single premium is mortality minus interest. The correct answer is: Mortality - Interest

Martin pays his policy premiums on a monthly basis. Which of the following terms best describes the frequency that Martin pays his premiums?

Premium payment mode describes the frequency that premiums are paid. The correct answer is: Premium payment mode

Which of the following is true regarding level premiums?

Level premium policyholders are essentially paying more in the earlier years of the policy, and less in later years than the risk of death warrants. The excess premium paid in earlier years funds the higher premium required in later years. The correct answer is: Policyholders are paying more premium than is needed in the early years of policy

Employer-paid premiums used to fund group life insurance for the benefit of employees are:

Employer-paid premiums used to fund group life insurance for the benefit of employees are tax-deductible as a business expense. The correct answer is: Tax-deductible as a business expense

In life insurance the risk of death increases with age, so premiums must be ______ in ______ years to account for this risk.

In life insurance the risk of death increases with age, so premiums must be higher in later years to account for this risk. The correct answer is: higher; later

Another term for insurers' expense is:

Insurers' expenses are called loading. These are the daily expenses of operating an insurance company. The correct answer is: Loading

Level premium life insurance policies usually have ______ premiums in order to account for the greater risk of death with advancing age.

Level premium policies usually have higher premiums in order to account for the greater risk of death with advancing age. With this in mind, level premium policyholders are essentially paying more in the earlier years of the policy, and less in later years than the risk of death warrants. The correct answer is: higher

Which of the following is not used to calculate the premium for life insurance contracts?

Morbidity describes the rate at which illness occurs; mortality describes the rate at which a specific population dies. The correct answer is: Morbidity