Question

How is the pricing expense assumption adjusted to reduce the risk of adverse future experience?

a.

By subtracting the margin from the best estimate expense assumption

b.

By multiplying the best estimate expense assumption with the margin

c.

By adding the margin to the best estimate expense assumption

d.

By dividing the best estimate expense assumption by the margin

Answer: (c).By adding the margin to the best estimate expense assumption Explanation:The pricing expense assumption is adjusted by multiplying the best estimate expense assumption by one plus the margin. This adjustment helps to account for potential higher expenses than expected, reducing the risk of adverse future experience.

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Q. How is the pricing expense assumption adjusted to reduce the risk of adverse future experience?

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