Life Insurance FundamentalsQuestion 131 of 315
All else equal, which premium-payment mode produces the highest total annual outlay for a policyowner?
a.Annual
b.Semi-annual
c.Monthly
d.Single-premium paid-up
Explanation
Modal loading adds a fee to more frequent payment modes to compensate the insurer for lost interest and added billing costs. Of the standard installment modes, monthly produces the highest total annual outlay; annual is the cheapest installment mode.
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