The Accumulation of a Reserve Consisting of Excess Payments Above

question 1

Multiple Choice

The accumulation of a reserve consisting of excess payments above the mortality cost in the early years of a policy is necessary for the:

• A) deferred annuity plan
• B) minimum reserve standard
• C) level-premium plan
• D) yearly renewable-term plan

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Definitions:

Economic Profits

The margin between total earnings and all incurred costs, accounting for both obvious and concealed expenses.

Accounting Profits

Net income reported on a company's financial statements, calculated as total revenues minus explicit costs, excluding opportunity costs.

Economic Profits

The surplus remaining after total costs are subtracted from total revenues, taking into account both explicit and implicit costs.

Accounting Profits

The difference between total revenue and explicit costs; the net income a firm reports on its income statement.