Question

The three primary elements in life insurance ratemaking are

Answers:
O costs, profits and taxes.
O mortality, loading and expenses.
O interest, mortality, and loading.
O mortality, expenses, and profits.
O interest, mortality, and profits.

Answer 1

The three primary elements in life insurance ratemaking are (b) mortality, expenses, and interest or loading, which cover the costs of claims, running the company, and profits respectively.

Step-by-step explanation:

The three primary elements in life insurance ratemaking are: mortality, expenses, and interest or loading. Mortality rates are the estimates of the number of individuals that will die within a given period. Expenses refer to the costs of running the insurance company, including administrative costs and processing insurance claims.

Loading, which is also known as the safety margin, represents the insurance company's profit goal plus a protective margin for unforeseen contingencies. Moreover, loading can also be considered as incorporating the insurance company's cost of capital.