Question

What does the gross premium include?

a.

Expected claim costs only

b.

Expected claim costs plus investment income on reserves

c.

Expected claim costs loaded for expenses, commissions, taxes, and profit margin

d.

Expected claim costs minus investment income on reserves

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).Expected claim costs loaded for expenses, commissions, taxes, and profit margin Explanation:The gross premium includes the expected claim costs loaded for expenses, commissions, taxes, required risk and profit margin, and may include a discount for investment income on reserves or cash flow.

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