Question

What factors do insurers consider while determining the optimum size of a policy?

a.

Expected volume of business and expected return on shareholder’s funds only

b.

Expected volume of business and expected financial strain only

c.

Expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds

d.

Expected financial strain and factors affecting the expected volume of business only

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).Expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds Explanation:While determining the optimum size of a policy, insurers consider expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds.

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Q. What factors do insurers consider while determining the optimum size of a policy?
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