Final answer:
A policy owner can pay premiums more than once a year under the Premium Payment Mode provision. Charging the actuarially fair premium to a group as a whole, rather than to each group separately, can lead to financial imbalances for an insurance company.
Step-by-step explanation:
The policy owner is allowed to pay premiums more than once a year under the Premium Payment Mode provision. This provision allows the policyholder to select a payment schedule that suits their financial situation, such as monthly, quarterly, or semi-annually, in addition to the standard annual payment option.
If an insurance company charges the actuarially fair premium to the group as a whole instead of to each group separately, it risks undercharging some groups and overcharging others. Actuarial fairness is determined based on the expected claims and expenses for each specific group. Therefore, charging a uniform premium to all groups may lead to financial losses if higher-risk groups pay the same premiums as lower-risk groups, because the premiums collected may not be sufficient to cover the claims of the higher-risk groups.