The pure premium for a life insurance policy is equal to:
A) The face value of the policy divided by the mortality rate.
B) The face value of the policy multiplied by the actuarially determined probability of a claim and then taking the present value of this amount using as the discount rate the expected rate of return to be earned on premium payments.
C) The face value of the policy plus the operating expenses of the policy divided by the mortality rate.
D) The face value of the policy plus the risk premium divided by the probability of a claim.
Correct Answer:
Verified
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