Question

Describe in words the insurance benefits with the present values given below.

a) The insurance benefits increase over time.

b) The insurance benefits remain constant.

c) The insurance benefits decrease over time.

d) The insurance benefits are unpredictable.

Answer 1

Insurance benefits can increase, remain constant, decrease, or be unpredictable over time. The correct option is a.

Step-by-step explanation:

In insurance, the insurance benefits can be described in different ways based on how they change over time:

1. The insurance benefits increase over time: This means that the amount of benefit you receive from the insurance policy grows over time. For example, a life insurance policy with increasing benefits might provide a higher payout as you get older.
2. The insurance benefits remain constant: In this case, the benefits of the insurance policy stay the same over time. For instance, a car insurance policy with constant benefits might provide a fixed amount of coverage for any accident or damage.
3. The insurance benefits decrease over time: Here, the benefits of the insurance policy decrease as time goes on. For example, a disability insurance policy might provide a higher benefit at the beginning but decrease over time as a person recovers.
4. The insurance benefits are unpredictable: Sometimes, the insurance benefits may vary or not follow a specific pattern. This could be due to factors like market conditions or individual circumstances. The correct option is a.