Final answer:
The statement is true. The insurance policy was written for a value of USD 8,300 and is contracted for a one-year term. The policyholder paid the premium in cash upfront.
Step-by-step explanation:
The statement is true. On December 2, an insurance policy was written for a value of USD 8,300. Payment in cash and contracted for a one-year term means that the policyholder paid the full premium upfront and the policy will be effective for one year. Therefore, the value of the insurance policy is USD 8,300 for a one-year term.
This illustrates a principle of insurance policies whereby the total premiums collected should be enough to cover all claims, operational costs, and leave a margin for the company's profit. It is important to note that this example simplifies the model and does not take into account other factors such as risk differentiation, reserve investment income, and administrative expenses.