Question

What is the difference between extra premium based extra mortality rate and standard extra premium?

a.

Extra premium based extra mortality rate is a flat or standard rate applied for expected extra mortality rate, while standard extra premium is the extra mortality rate converted into extra premium.

b.

Extra premium based extra mortality rate and standard extra premium are the same.

c.

Extra premium based extra mortality rate is only charged for specific individuals, while standard extra premium is charged for all individuals covered by the product.

d.

None of the above

Posted under IC22 Life Insurance Underwriting

Answer: (a).Extra premium based extra mortality rate is a flat or standard rate applied for expected extra mortality rate, while standard extra premium is the extra mortality rate converted into extra premium. Explanation:Extra premiums can be loaded in two ways: extra premium based extra mortality rate and standard extra premium. In extra premium based extra mortality rate, the extra mortality rate that has been calculated for sub-standard life and the risk associated is converted into extra premium, which is then charged in addition to the tabular premium. In standard extra premium, a flat or standard rate is applied for expected extra mortality rate for a certain adverse factor such as dangerous hobbies like mountaineering. Hence, all prospects who are engaged in dangerous hobbies will be charged an extra premium of a specified amount for getting the cover.

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Q. What is the difference between extra premium based extra mortality rate and standard extra premium?
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