Multiple choice

Which of the following statements is correct?

  1. The typical loading to net premium would have 3 parts: (a) a constant amount for premiums, (b) a constant amount for each ‘1000 sum assured’ and (c) a constant amount per policy.

  2. The typical loading to a net premium would have 3 parts: (a) a percentage of premiums, (b) a constant amount for each ‘1000 sum assured’ and (c) a constant amount per policy.

  3. The typical loading to a net premium would have 3 parts: (a) a percentage of premiums, (b) a constant percentage for each ‘1000 sum assured’ and (c) a constant amount per policy.

  4. The typical loading to a net premium would have 3 parts: (a) percentage of premiums, (b) a constant amount for each ‘1000 sum assured’ and (c) a percentage amount per policy.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The calculated difference between net premium and gross premium equals the expected present value of expense loadings less the expected present value of future expenses. The typical loading to a net premium would have 3 parts: (a) a percentage of premiums, (b) a constant amount for each ‘1000 sum assured’ and (c) a constant amount per policy.

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