Question

What is the key difference between "surplus" and "strain" in life insurance?

a.

Surplus is the excess of assets over liabilities, while strain is the excess of liabilities over assets.

b.

Surplus is a positive value, while strain is a negative value.

c.

Surplus represents a financial benefit, while strain indicates financial difficulty.

d.

Surplus and strain are interchangeable terms in life insurance.

Posted under IC38 Life Insurance Agent Exam

Answer: (c).Surplus represents a financial benefit, while strain indicates financial difficulty. Explanation:Surplus represents an excess of assets over liabilities, indicating a financial benefit, while strain is a negative surplus, signifying financial difficulty.

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Q. What is the key difference between "surplus" and "strain" in life insurance?
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