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Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?
  • a)
    There is no difference in premiums based on the payment mode.
  • b)
    Monthly payments are more convenient for customers, so they are cheaper.
  • c)
    Insurance companies charge more for frequent payments to cover administrative costs.
  • d)
    Insurance companies charge less for frequent payments to encourage regular premiums.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Why do insurance companies charge different premiums based on the mode...
Insurance companies charge different premiums based on the mode of premium payment to cover administrative costs. When policyholders make more frequent payments, such as monthly or quarterly, the administrative and processing costs for the insurance company increase. To offset these additional expenses, insurance companies charge slightly higher premiums for more frequent payment modes. On the other hand, annual payments are typically less expensive because they reduce administrative overhead.
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Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?a)There is no difference in premiums based on the payment mode.b)Monthly payments are more convenient for customers, so they are cheaper.c)Insurance companies charge more for frequent payments to cover administrative costs.d)Insurance companies charge less for frequent payments to encourage regular premiums.Correct answer is option 'C'. Can you explain this answer?
Question Description
Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?a)There is no difference in premiums based on the payment mode.b)Monthly payments are more convenient for customers, so they are cheaper.c)Insurance companies charge more for frequent payments to cover administrative costs.d)Insurance companies charge less for frequent payments to encourage regular premiums.Correct answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?a)There is no difference in premiums based on the payment mode.b)Monthly payments are more convenient for customers, so they are cheaper.c)Insurance companies charge more for frequent payments to cover administrative costs.d)Insurance companies charge less for frequent payments to encourage regular premiums.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Why do insurance companies charge different premiums based on the mode of premium payment (e.g., monthly, quarterly, annually)?a)There is no difference in premiums based on the payment mode.b)Monthly payments are more convenient for customers, so they are cheaper.c)Insurance companies charge more for frequent payments to cover administrative costs.d)Insurance companies charge less for frequent payments to encourage regular premiums.Correct answer is option 'C'. Can you explain this answer?.
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