Question

Why are level premiums necessary in life insurance?

a.

Level premiums ensure that older individuals pay lower premiums than younger ones.

b.

Level premiums help insurance companies charge higher rates for younger people.

c.

Level premiums help cover the higher risk of death at older ages without raising premiums as individuals age.

d.

Level premiums reduce the overall cost of life insurance policies.

Posted under IC38 Life Insurance Agent Exam

Answer: (c).Level premiums help cover the higher risk of death at older ages without raising premiums as individuals age. Explanation:Level premiums are necessary in life insurance because they allow the premiums collected in earlier years to compensate for the higher risk of death at older ages. This ensures that premiums do not need to increase as individuals age, making life insurance affordable for policyholders.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. Why are level premiums necessary in life insurance?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the primary difference in risk between general insurance and life insurance?

View solution

Q. Why do insurance companies use level premiums for life insurance policies?

View solution

Q. How does the concept of level premiums apply to general insurance policies?

View solution

Q. What role does the Principle of Pooling play in life insurance?

View solution

Q. What is the purpose of the life insurance policy document?

View solution

Q. Why is life insurance often compared to financial products?

View solution

Q. What is one of the advantages of cash value life insurance contracts?

View solution

Q. What is one of the disadvantages of cash value life insurance contracts?

View solution

Q. The principle of risk pooling in life insurance primarily serves to:Which document serves as evidence of the life insurance contract and contains all the terms and conditions of the insurance?

View solution

Q. The principle of risk pooling in life insurance primarily serves to:

View solution

Q. What does the sum assured in a life insurance policy imply?

View solution

Q. What is one of the advantages of life insurance as a financial product?

View solution

Q. What is one of the disadvantages of life insurance as a financial product?

View solution

Q. In financial terms, what is an asset?

View solution

Q. What does the Human Life Value (HLV) concept measure?

View solution

Q. What is a characteristic of a level premium in a life insurance policy?

View solution

Q. How can mutuality help reduce risk in financial markets?

View solution

Q. What does the element of guarantee in a life insurance contract imply?

View solution

Q. How does diversification reduce risks in financial markets?

View solution
View All MCQs on IC38 Life Insurance Agent Exam

Recommended Subjects

Are you eager to expand your knowledge beyond IC38 Life Insurance Agent Exam? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Human and Cultural Diversity

Explore the rich tapestry of human societies with our Human and Cultural Diversity...

IC38 Life Insurance Agent Exam

Prepare for success in the Insurance Institute of India (III) IC38 IRDA examination...

Waste Water Engineering

Navigate the challenges of wastewater treatment and management with our Waste Water...

Textile Engineering

Explore the dynamic world of Textile Engineering with our specialized category. Delve...

Mechanical Engineering

Explore the world of Mechanical Engineering with our specialized category. Dive into...

Tissue Engineering

Delve into the cutting-edge field of Tissue Engineering with our specialized...

Fluid Mechanics

Unlock the mysteries of fluids and their behavior with our Fluid Mechanics category....

Highway Engineering

Navigate the road to efficient transportation with our Highway Engineering category....

Civil Engineering

Dive into the world of Civil Engineering with our specialized category. Explore the...