Question

How is the discounted payback period typically used in insurance decision making?

a.

It is used as the prime criterion for selecting insurance products

b.

It is referenced alongside the net present value to inform product design

c.

It is used to calculate the total premium income of insurance companies

d.

It is employed to determine the commission rates for insurance agents

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).It is referenced alongside the net present value to inform product design Explanation:The discounted payback period is typically referenced alongside the net present value to inform product design in insurance decision making. While the net present value is the prime criterion, the discounted payback period provides additional information about the time it takes for the company to recover its initial investment.

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Q. How is the discounted payback period typically used in insurance decision making?
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