Question

What is the purpose of the terminal bonus in insurance contracts?

a.

To increase the policyholder's premium payments

b.

To provide an additional bonus at the end of the policy term

c.

To protect the insurer from falls in investment markets

d.

To reduce the sum assured for the policyholder

Answer: (c).To protect the insurer from falls in investment markets Explanation:The terminal bonus in insurance contracts is designed to protect the insurer from losses due to market downturns by withholding a portion of the fund for smoothing or earning higher expected returns.

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Q. What is the purpose of the terminal bonus in insurance contracts?

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