Question

What does Premium Allocation Charge (PAC) refer to?

a.

The portion of premium utilized to purchase units for the policyholder

b.

The premium paid by policyholders

c.

The charge levied on policyholders for policy administration

d.

The charge levied at the time of policy maturity

Posted under IC 14 Regulations of Insurance Business

Answer: (a).The portion of premium utilized to purchase units for the policyholder Explanation:Premium Allocation Charge (PAC) refers to the percentage of the premium appropriated towards charges, with the balance utilized to purchase units for the policyholder. This charge is deducted at the time of receipt of premium.

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