[amp_mcq option1=”Sum assured chosen by the buyer” option2=”Type of policy chosen by the buyer” option3=”Term of the plan chosen by the buyer” option4=”Mode of payment (cash, cheque, card) chosen by the buyer” correct=”option3″]
The correct answer is: C. Term of the plan chosen by the buyer.
Life insurance companies may offer rebate to the buyer on the premium that is payable on the basis of the term of the plan chosen by the buyer. This is because the longer the term of the plan, the higher the risk for the insurance company and the higher the premium. By offering a rebate, the insurance company is encouraging buyers to choose a longer term plan.
The other options are incorrect because they are not factors that affect the risk for the insurance company and the premium.
- Option A: The sum assured is the amount of money that will be paid out to the beneficiaries if the insured person dies. The sum assured does not affect the risk for the insurance company and the premium.
- Option B: The type of policy is the type of coverage that is offered by the insurance company. The type of policy does not affect the risk for the insurance company and the premium.
- Option D: The mode of payment is the way that the premium is paid. The mode of payment does not affect the risk for the insurance company and the premium.