Question

How do insurance companies collect and use premiums?

a.

They invest premiums in speculative ventures

b.

Premiums are not collected by insurance companies

c.

Premiums are pooled together as funds for the benefit of policyholders and the community

d.

Premiums are used to cover administrative expenses only

Posted under IC38 Life Insurance Agent Exam

Answer: (c).Premiums are pooled together as funds for the benefit of policyholders and the community Explanation:Insurance companies collect small amounts of premium and pool them together as funds for the benefit of policyholders and the community.

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Q. How do insurance companies collect and use premiums?
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