Question

How do policyholder options impact the riskiness of a product?

a.

They mitigate risks by providing flexibility.

b.

They increase profits by attracting more customers.

c.

They pose a danger if not priced properly, potentially leading to significant losses.

d.

They have no effect on the profitability of the product.

Answer: (c).They pose a danger if not priced properly, potentially leading to significant losses. Explanation:Policyholder options, if not adequately priced, can be detrimental to the company's profitability. Improperly priced options may result in unexpected losses if a large number of policyholders exercise their options, converting potential profits into significant losses.

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Q. How do policyholder options impact the riskiness of a product?

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