Chapter 2 (Premium Determination)

Question 1

Premiums are paid in ___________.

Answer 1

advance

Question 2

__________ is the ratio of the number of deaths in a specific population over a certain amount of time versus the number of living people in that population.

Answer 2

Mortality

Question 3

____________, used by insurers, indicate the number of individuals within a specified group of individuals (e.g., males, females, smokers, nonsmokers) starting a

Answer 3

Mortality tables

Question 4

The _____________ includes the mortality and interest components necessary to keep the policy in force until maturity.

Answer 4

net single premium

Question 5

How do you calculate net premium?

Answer 5

Mortality - Interest = net premium

Question 6

____________ is the one-year cost for mortality, plus the cost of operating the company (or expense loading).

Answer 6

Gross annual premium

Question 7

How do you calculate Gross premium?

Answer 7

Net premium + expense (loading) = gross premium

Question 8

In regard to insurance premiums, mode refers to the _______ the policy owner pays the premium

Answer 8

frequency

Question 9

Higher the frequency the ________ premium

Answer 9

Higher