What are the four 4 factors that affect the cost of money?
The four most major factors that impact the cost of money include production opportunities, time preferences for consumption, risk, and inflation.

What are the main components of gross premium?
Gross premium is the total premium paid by the insured. It consists of the net premium plus the operation expenses minus the interest. The premium amount indicates the total premium that contains brokerage and discounts.

What is a premium How are premiums calculated?
The rate is an insurance provider’s internal calculation of the cost for one unit of insurance over one year. The premium is the rate times the number of units purchased, and the annual amount the customer ultimately pays. Your premium for $25,000 worth of coverage would be $27.50 per year.

What are the 6 factors affecting option price?
Option pricing theory uses variables (stock price, exercise price, volatility, interest rate, time to expiration) to theoretically value an option. Essentially, it provides an estimation of an option’s fair value which traders incorporate into their strategies to maximize profits.

What are the 4 main risk factors?
Behavioural. Physiological. Demographic. Environmental. Genetic.

Which of the following is the best description of insurer?
Which of the following best defines “insurer”? – An individual or organization that pays premiums in exchange for protection.

What is the basic function of insurance companies?
They cover expenses the policyholder incurs from damages to health or property (policies typically offered are medical expenses, or house, motor vehicle and fire insurance), and financial losses like a loss of income. A special case of non-life insurance is reinsurance.

Which of the following are examples of third party ownership of a life insurance policy except?
All of the following are examples of a third-party ownership EXCEPT: S applies for a policy on herself and names her husband as the beneficiary. Third-party ownership exists when the insured and the owner of the policy are different persons. A business owner buys a life policy on his own life.

What does annuity protect the annuitant against?
Annuity contracts transfer all the risk of a down market to the insurance company. This means you, the annuity owner, are protected from market risk and longevity risk, that is, the risk of outliving your money.

Who is the third party in life insurance?
The first party is the insured individual. The second party is the insurance company. The third party is another individual. Therefore, a third-party insurance claim is made by someone who is not the policyholder or the insurance company.

What is the common factor between increasing and decreasing term life insurance?
The idea behind both increasing or decreasing term life insurance is simple, as people’s lives change, so does their life insurance needs. With an increasing term life insurance policy, every year, the death benefit from the plan is going to increase.

What are the three hazards most related to life insurance?
The insurance industry commonly divides hazards into three categories: physical, moral, and morale.

What does premium percentage mean?
Premium Percentage . With respect to any Mortgage Loan, a percentage equal to the excess of the Purchase Price Percentage over 100%.

What increases option premium?
An option’s premium (intrinsic value plus time value) generally increases as the option becomes further in-the-money. A put option is in-the-money if the strike price is greater than the market price of the underlying security.. It decreases as the option becomes more deeply out-of-the-money.

What are 5 examples of a risk factor?
Negative attitudes, values or beliefs. Low self-esteem. Drug, alcohol or solvent abuse. Poverty. Children of parents in conflict with the law. Homelessness. Presence of neighbourhood crime. Early and repeated anti-social behaviour.

What is the primary purpose of life insurance?
Why is life insurance important? Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.

What is group life insurance most likely to be for quizlet?
The most common use of group life insurance is in the business arena. Employers buy group life coverage for the benefit of their employees. Group life insurance is most often provided in the form of annually renewable term insurance (though a form of group permanent life insurance is available).

Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in TX?
If an insured sustains a loss on a policy sold by an agent through an insurance company that is not authorized to do business in Texas, which of the following would be liable? The correct answer is “The agent and the company”.

Who is third party insurer?
Third party – third-party car insurance is the minimum level of car insurance the law allows. It covers damage to another person’s car, along with compensation costs for injuries to other people. This type of cover won’t cover damage to your own vehicle or your own injuries, if the accident is deemed to be your fault.

Who is the person whose risk is covered under an insurance contract?
2) The insured is the person whose life is being covered against the risk under the policy.