Life & Health Insurance Exam (National Portion)General InsuranceEasy
A life insurance company uses a statistical method to project future claims based on historical mortality rates, interest earnings, and operating expenses. This analysis is crucial for determining the appropriate premium rates for its policies. The professional responsible for this analysis is primarily an:
- AActuary
- BUnderwriter
- CClaims adjuster
- DBroker
Show answer & explanationAnswer & explanation
Correct answer: A. Actuary
Actuaries are highly specialized professionals who use mathematical and statistical models to assess risk and calculate premiums for insurance policies, taking into account factors like mortality, morbidity, interest, and expenses.
Why the other options are wrong
- B. An underwriter assesses individual risks and determines whether to accept or decline an application.
- C. A claims adjuster investigates and settles claims.
- D. A broker represents the insured and helps them find suitable insurance policies.
Actuary's Role
An actuary is a business professional who deals with the measurement and management of risk and uncertainty. They apply mathematical and statistical methods to assess risk in insurance, finance, and other industries.
- Calculates premium rates
- Determines reserves
- Analyzes mortality/morbidity data
Memory trick: Each pro has a specific role, like gears in a well-oiled machine.