Question

How does the design of an insurance product affect the expected volume of business?

a.

A complex benefit structure leads to increased sales volumes

b.

Ambiguous product design makes it easier to increase sales

c.

A simple and understandable product design facilitates increased sales

d.

Too many options for bonus payments lead to clear product design

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).A simple and understandable product design facilitates increased sales Explanation:A simple and understandable product design facilitates increased sales. If the design of an insurance product is simple to understand, it is easier for insurers to increase sales, even if the premium rate is highly attractive. Conversely, a complicated benefit structure or commission structure can make it difficult to increase sales.

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Q. How does the design of an insurance product affect the expected volume of business?
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