Question

What is the purpose of the formula method in determining premiums?

a.

To calculate future values of premiums

b.

To project incomes and outflows into the future

c.

To use actuarial formulae to determine premiums

d.

To rely on cash flow projections for premium determination

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).To use actuarial formulae to determine premiums Explanation:The purpose of the formula method is to use actuarial formulae to determine premiums based on present values of benefits and expenses.

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Q. What is the purpose of the formula method in determining premiums?
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