[amp_mcq option1=”Gross premiums” option2=”Single premiums” option3=”Advance premiums” option4=”Level premiums” correct=”option4″]<\/p>\n
The correct answer is D. Level premiums.<\/p>\n
Level premiums are insurance premiums that remain the same for the life of the policy. This is in contrast to increasing premiums, which are premiums that increase over time as the insured person ages.<\/p>\n
Increasing premiums can lead to a problem known as adverse selection, which is when healthy people are more likely to drop out of a insurance plan than unhealthy people. This is because healthy people are less likely to need to use the insurance, so they are not getting as much value for their money. As a result, the insurance company is left with a higher proportion of unhealthy people, who are more likely to use the insurance. This can lead to the insurance company raising premiums even further, which can lead to even more healthy people dropping out of the plan.<\/p>\n
Level premiums help to address the problem of adverse selection by keeping premiums the same for everyone. This makes it more likely that healthy people will stay in the plan, which helps to keep premiums down for everyone.<\/p>\n
A. Gross premiums are the total amount of money that an insurance company expects to collect from all of its policyholders in a given year.
\nB. Single premiums are the total amount of money that an insurance company collects from a policyholder at the time the policy is purchased.
\nC. Advance premiums are premiums that are paid in advance, typically at the beginning of each policy year.<\/p>\n","protected":false},"excerpt":{"rendered":"
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