Question

"Some policies offer the policyholder the opportunity to purchase additional insurance when they get married, or have children. What is the factor that determines the rate of the additional coverage?

a. The initial date of the policy
b. The attained age of the insured when the additional insurance is purchased
c. The exclusion of a waiver of premium rider
d. The reason for wanting the additional insurance

Answer 1

b. The attained age of the insured when the additional insurance is purchased

The rate of additional insurance coverage after marriage or having children is determined by the attained age of the insured when the additional coverage is purchased, with age being a primary risk assessment factor for insurers.

Step-by-step explanation:

The factor that determines the rate of the additional coverage when a policyholder elects to purchase more insurance after getting married or having children is b. The attained age of the insured when the additional insurance is purchased.

This means that the age of the insured at the time they decide to buy extra insurance coverage is what affects their premium rates for the added policy. Insurance companies assess risk and set premiums based on factors like age, health history, and the likelihood of an insured event occurring.

Since younger individuals tend to have a lower risk of filing a claim than older individuals, the cost for additional coverage would generally be lower for them.

In the context of car insurance or life insurance, understanding the influence of these risk factors, such as age, driving history, and personal health histories, is crucial for both policyholders and insurers to ensure actuarially fair premium rates.