Multiple choice

What is insurance rate?

  1. Rate of interest which insurer pays to an insured person/company based on the total premium paid.

  2. Factor used to determine the amount called the premium, to be charged for a certain amount of insurance coverage.

  3. The number of claims made during a period of time.

  4. The number of claims made by a person during his term of insurance.
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B Correct answer
Explanation

An insurance rate is the numerical factor used to calculate the premium for a specific amount of insurance coverage. It is determined by actuaries based on the probability of loss and the cost of claims. The premium is the final amount the policyholder pays, derived from this rate.

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