Fund life & health insurance Explain carefully why this statement is false The “net rate” takes...

Fund life & health insurance

Explain carefully why this statement is false

The “net rate” takes into consideration of the probability of the insured event happening during the term of the insurance, and the expenses insured by the insurer in maintaining the policy.

Solutions

Expert Solution

This statement is false.

The ''Net rate'' is calculated by deducting the expected PV of future premiums from the present value of benefits from an insurance policy. It does not take into consideration the future expenses by the insurer for maintaining the insurance policy.

It is the gross premium or gross rate which does take into account future expenses also. The difference between net premium and gross premium will be equal to the PV of expenses minus the PV of future expenses.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Fund life & health insurance Explain carefully why this statement is false Since the level of...

Fund life & health insurance Explain carefully why this statement is false Since the level of insurer’s capital reflects its financial stability, companies with the highest absolute value of capital is always preferred.

Fund life & health insurance Explain carefully why this sentence is false The judgment method is...

Fund life & health insurance Explain carefully why this sentence is false The judgment method is a preferred method when multiple factors (sometimes conflicting) factors are involved.

Fund life & health insurance Explain carefully why this statement is true. Reserve capital cannot be...

Fund life & health insurance Explain carefully why this statement is true. Reserve capital cannot be spending on operations but must be hold and have available to pay expected claims

Fund life & health insurance Explain carefully why this statement is true. Risk capital can assume...

Fund life & health insurance Explain carefully why this statement is true. Risk capital can assume more risk than the reserve capital.

Read the statement below carefully, and decide whether it is true or false. And then EXPLAIN...

Read the statement below carefully, and decide whether it is true or false. And then EXPLAIN your answer (whether "true" or "false"). When diminishing marginal returns starts occurring, the addition of successive units of a variable resource to a fixed resource will cause the firm’s production to diminish.

1.Read the statement below carefully, and decide whether it is true or false. And then EXPLAIN...

1.Read the statement below carefully, and decide whether it is true or false. And then EXPLAIN your answer (whether “true “ or “false”). Regarding interest rates, actual (or realized) real rates can be negative but nominal rates cannot be negative. 2.The net-export effect suggests that if an economy’s price level decreases, then the economy’s net exports will decrease. - True/False explain 3. Cost-push inflation can also be described as stagflation. - True/False explain 4.Automatic fiscal stabilizers tend to turn the...

Fund Life & Health insurance How does the law of insurable interest protect human life? (identifying...

Fund Life & Health insurance How does the law of insurable interest protect human life? (identifying the requirement of the law and insurance company and analyzing how it protects general public.) What factors make joint life an effective tool in the case of a buy-sell agreement? ( Explain how JL matches the need for buy-sell agreement timing and analyzing what riders in JL benefits in the situation of buy-sell agreement.)

Question