Life insurance underwriters cannot determine which of their clients will die this year. However, their business success depends upon their ability to predict how many of those clients will die, based on population death rates in categories of age, gender, etc. Life insurance companies are using __________ to make their decisions about whom to insure and the premiums to charge.
A) uncertainty
B) alternative risk
C) subjective probabilities
D) objective probabilities

Question

Quizplus · Accepted Answer

Life insurance companies rely on objective probabilities, which are based on historical data and statistical analysis of population death rates by age, gender, and other factors, to predict mortality rates and make decisions about insuring individuals and setting premiums.

Life Insurance Underwriters Cannot Determine Which of Their Clients Will