Question

What factors determine the cost of an expected loss in insurance?

a.

Probability of loss occurrence only

b.

Severity of loss only

c.

Both the probability and severity of loss

d.

The type of peril being insured against

Posted under IC38 Life Insurance Agent Exam

Answer: (c).Both the probability and severity of loss Explanation:The cost of an expected loss in insurance is determined by both the probability of loss occurrence and the severity (amount) of the loss.

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Q. What factors determine the cost of an expected loss in insurance?
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