Question

How can insurers use commission structure to control withdrawal risk?

a.

By offering higher initial commissions to agents

b.

By linking commissions to persistency targets

c.

By paying lower commissions on single premium products

d.

By imposing penalties on agents for early policy surrenders

Answer: (b).By linking commissions to persistency targets Explanation:Linking commissions to persistency targets incentivizes agents to focus on policy retention, thus helping to control withdrawal risk.

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Q. How can insurers use commission structure to control withdrawal risk?

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