Discuss the building blocks of an insurance premium.

Expert Solution

Insurance premium depends on the perceived risk by the insurer for the insured person/company.

Below are the factors on which insurance premium depends:

1. Probability of event (e.g. death for term insurance, illness for health insurance etc.)

2. Age of the person (for more aged person more risk is involved and higher premium)

3. Income of the person (more income less risk and lesser premium and vice versa)

4. Habits of the person (Smokers has more risk than a non smoker)

5. Tenure and sum assured of the insurance etc. are the building blocks of an insurance premium.

jeff jeffy answered 2 years ago

Please explain and discuss the building blocks of the insurance premium.

List the four building blocks of an insurance premium. Why are investment earnings included in the...

List the four building blocks of an insurance premium. Why are investment earnings included in the calculations?

A firm owns a building worth 1,500,000. The premium for insurance on the building will cost...

A firm owns a building worth 1,500,000. The premium for insurance on the building will cost $50,000.00. Expected annual losses on the building is $30,000. The firm would earn 14% on funds applied to operations. Invested reserves earn 4%. What is the true cost of retaining the risk of loss on its building, including opportunity costs. Explain your answer and show your work.

Identify and discuss the three building blocks of organizational structure.

List and briefly discuss the six building blocks for Successful change. Here are the 6 building...

List and briefly discuss the six building blocks for Successful change. Here are the 6 building blocks 1. A focused vision 2. Guiding values 3. Personal incentives 4. Supporting resources 5. Sound judgement 6. Action plan

Show a general formula for the building blocks of protein and illustrate how these building blocks...

Show a general formula for the building blocks of protein and illustrate how these building blocks are connected to form protein.

The annual insurance premium for the factory building would be a: a. fixed cost, period cost,...

The annual insurance premium for the factory building would be a: a. fixed cost, period cost, and indirect cost with regard to units of product. b. fixed cost, product cost, and direct cost with regard to units of product. c. variable cost, product cost, and direct cost with regard to units of product. d. fixed cost, product cost, and indirect cost with regard to units of product.

Sort these nucleotide building blocks by their name or classification.

what are the building blocks of the rocket model of leadership

In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a...

In calculating insurance premiums, the actuarially fair insurance premium is the premium that results in a zero NPV for both the insured and the insurer. As such, the present value of the expected loss is the actuarially fair insurance premium. Suppose your company wants to insure a building worth $245 million. The probability of loss is 1.25 percent in one year, and the relevant discount rate is 4 percent. a. What is the actuarially fair insurance premium? (Do not round...

Question