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The correct answer is: B. Perils are risks that policyholders will die before a specified date and hazards are factors which could influence that risk.
Perils are the events that could cause a loss, such as death in the case of term insurance. Hazards are the factors that increase the likelihood of a peril occurring, such as smoking or obesity.
For example, if a policyholder is a smoker, they are more likely to die before a specified date than a policyholder who is not a smoker. This is because smoking is a hazard that increases the risk of death.
Insurance companies use perils and hazards to calculate the premium for a policy. The higher the risk of a peril occurring, the higher the premium will be.
It is important to understand the difference between perils and hazards so that you can make informed decisions about your insurance coverage.