Question

What does the discounted payback period represent in insurance decision making?

a.

The duration of the insurance policy

b.

The time it takes for policyholders to recover their initial investment

c.

The time it takes for the company to recover its initial investment with interest

d.

The period over which insurance claims are paid out by the company

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).The time it takes for the company to recover its initial investment with interest Explanation:The discounted payback period in insurance decision making refers to the duration at which the profits generated by the policy have a present value of zero. It represents the time it takes for the company to recover its initial investment with interest at the risk discount rate.

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Q. What does the discounted payback period represent in insurance decision making?
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