Life Insurance Basics
Why does paying premiums monthly cost more over a year than paying annually?
Answer and explanation
Answer: C. More frequent modes deprive the insurer of investment earnings on money it has not yet collected and add billing and collection expense, so a modal loading is applied. Underwriting is not repeated and the tax treatment does not vary with the mode.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, mode of premium
More life insurance basics questions
- If an insurer's expected investment return rises, what happens to the premium, other things being equal?
- In a corporate key-person life insurance arrangement, who is the policyowner, premium payor, and beneficiary?
- May a New York producer point to the Life Insurance Company Guaranty Corporation as a reason to buy?
- On what must a recommendation under Regulation 187 be based?
- Two clients need the same monthly survivor income. Why does the capital retention approach require a larger death benefit than capital liquidation?
- Two partners agree that on the death of either, the survivor will buy the deceased's share. How does life insurance support that?
621 New York questions like this one.
Every answer explained, the ones you miss come back on a spaced schedule, and a plan built from your exam date.