Question

What is a "Premium" in insurance?

a.

The bonus paid by the insurer to the policyholder

b.

The penalty charged for late payment of premiums

c.

The amount paid by the policyholder to the insurer in exchange for insurance coverage

d.

The additional fee for adding optional benefits to a policy

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).The amount paid by the policyholder to the insurer in exchange for insurance coverage Explanation:In insurance, a "Premium" refers to the payment made by the policyholder to the insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency, such as death or disability.

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