Principles of Risk Management and Insurance, 13th Edition

Review Questions

1. Explain the basic defect in the traditional net cost method for determining the cost of life insurance.

2. 1. a. Why is the interest-adjusted cost method a more accurate measure of the cost of life insurance?

   2. Briefly describe the surrender cost index as a method for determining the cost of life insurance.

   3. Briefly describe the net payment cost index as a method for determining the cost of life insurance.

3. Why is the rate of return on the saving component in most cash-value policies negative during the early years of the policy?

4. Briefly explain the Linton yield as a method for determining the rate of return on the saving component of a cash-value policy.

5. Briefly explain the yearly rate-of-return method that policyholders can use to determine ...