Question

What problem may arise with heavy up-front expenses recouped gradually over the term of a policy?

a.

Policyholders may withdraw their policies

b.

The insurance company may face legal issues

c.

The expenses may exceed the policy's benefits

d.

There may be a decrease in policyholders' trust

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (a).Policyholders may withdraw their policies Explanation:With heavy up-front expenses recouped gradually over the term of a policy, the insurance company may be vulnerable to policy withdrawals.

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Q. What problem may arise with heavy up-front expenses recouped gradually over the term of a policy?
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