Final answer:
The period during which premiums are paid for an annuity is known as the accumulation period. The actuarially fair premium for life insurance would depend on the mortality rates of different risk groups and would require adjustments if specific risk data like family cancer histories is not available.
The correct option is b. accumulation period.
Step-by-step explanation:
The period during which premiums are paid for the purchase of an annuity is called the accumulation period. Therefore, the correct option for this question would be 'b. accumulation period.' The accumulation period is the span of time when an investor or policyholder is paying into the annuity and the savings are building up. It is distinguishable from the distribution period, which occurs when the annuitant starts to receive periodic payments from the annuity.
To determine the actuarially fair premium for life insurance for groups with different risks, actuaries would assess the mortality rates and the expected value of payouts. If the insurance company could not differentiate between those with and without family cancer histories, the premium for the group as a whole would be a weighted average, considering the mortality risk across the entire pool. Typically, if this average premium was used for all, it might lead to adverse selection, where higher-risk individuals are more likely to purchase insurance, potentially leading to losses for the insurance company if the collected premiums do not adequately cover the claims.