SCI CLUS04 Practice Questions - SCI CLU® S CLUS04 Life Insurance Company Operations (Singapore) Exam

In actuarial pricing for individual life insurance, how is the net premium distinguished from the gross premium?

Net premium covers only pure mortality and interest assumptions, while gross premium adds expense loading, contingency margins, and profit margins Net premium includes agent commissions and overhead expenses, while gross premium deducts reinsurance recoveries Net premium represents the premium payable after deducting non-forfeiture cash values, while gross premium is the published rate table figure Net premium is charged to non-smoking policyholders, while gross premium applies to standard and substandard risk classes

Correct Answer:

Net premium covers only pure mortality and interest assumptions, while gross premium adds expense loading, contingency margins, and profit margins

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