Question

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

a.

It ensures that all life insurance policies provide the same level of coverage.

b.

It guarantees that life insurance premiums remain fixed throughout the policy term.

c.

It creates a fund that pools contributions from many policyholders to provide protection against economic loss due to premature death.

d.

It regulates the investment of life insurance funds in high-return financial instruments.

Posted under IC38 Life Insurance Agent Exam

Answer: (c).It creates a fund that pools contributions from many policyholders to provide protection against economic loss due to premature death. Explanation:The Principle of Pooling in life insurance creates a fund by pooling contributions from many policyholders. This fund is used to provide protection against economic loss resulting from the untimely death of an insured individual.

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