Final answer:
For Denzell's life insurance evaluation, A.M. Best ratings, dividend/interest rate history, and the NAIC Watchlist are the most relevant sources to consult, while actuarial fairness requires considering individual and pooled group risks in premium calculations.
Step-by-step explanation:
When advising a client like Denzell on purchasing a life insurance contract, professional guidance would focus on evaluating insurance companies based on several criteria. He should consider II) the company's A.M. Best rating, which assesses the financial strength and creditworthiness of insurers, III) the company's dividend and/or interest rate history, which can indicate profitability and policy performance, and IV) the National Association of Insurance Commissioners Watchlist, which can highlight insurers with regulatory concerns. In contrast, the Wall Street Journal rating is not a specific metric used for evaluating insurance companies. Therefore, the best options to consult would be II, III, and IV.
Actuarially fair premiums would depend on the group's risk profile. For life insurance, if sold separately to groups with different family cancer histories, premiums would differ based on the increased risk associated with a family history of cancer. For the group as a whole, without knowing individual family cancer histories, the premium would be averaged across the entire group to account for the pooled risk. The fundamental law of insurance states that premiums should cover claims, company costs, and provide a profit margin; this principle guides the premium calculation.