Question

What is the primary characteristic of the cash flow method?

a.

It relies solely on the insurer's profit margin

b.

It uses mortality rates to determine premiums

c.

It projects expected incomes and outflows into the future

d.

It calculates premiums using a fixed radix

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).It projects expected incomes and outflows into the future Explanation:The primary characteristic of the cash flow method is that it projects expected incomes and outflows into the future to determine the best premium rate or charges.

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Q. What is the primary characteristic of the cash flow method?
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