Question

How can the cost of benefit be calculated in insurance terms?

a.

By multiplying the benefit amount by the probability of it being payable

b.

By adding the benefit amount to the probability of it being payable

c.

By subtracting the probability of benefit payment from the benefit amount

d.

By dividing the benefit amount by the probability of it being payable

Answer: (a).By multiplying the benefit amount by the probability of it being payable Explanation:The cost of benefit can be calculated by discounting the value of AB, where B is the amount of benefit and A is the probability that the benefit is payable at that point in time.

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Q. How can the cost of benefit be calculated in insurance terms?

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