Question

How does an insurer use rating factors to determine rates?

a.

By adding loadings for positive features

b.

By applying discounts for adverse features

c.

By establishing a base rate and adjusting it

d.

By increasing the deductible for all policies

Posted under IC38 Life Insurance Agent Exam

Answer: (c).By establishing a base rate and adjusting it Explanation:Insurers use rating factors to establish a base rate and then adjust it with discounts for positive features and loadings for adverse features.

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Q. How does an insurer use rating factors to determine rates?
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