Question

What is the purpose of with-profit contracts offering bonuses or dividends?

a.

To increase the premiums paid by policyholders

b.

To provide guaranteed benefits only

c.

To induce policyholders to buy insurance products by offering additional benefits

d.

To reduce the investment risk for the insurer

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).To induce policyholders to buy insurance products by offering additional benefits Explanation:With-profit contracts offer bonuses or dividends to induce policyholders to purchase insurance products by providing additional benefits, thereby incentivizing them to invest in these policies.

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Q. What is the purpose of with-profit contracts offering bonuses or dividends?
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