You Overhear the Following in the Hallway, "Everyone Eventually Dies

question 141

Multiple Choice

You overhear the following in the hallway, "Everyone eventually dies, so how can a life insurance company make a profit? Isn't it a losing battle? You will always have to pay the death benefit to your clients!" You know that life insurance companies can be profitable. This is because

• A) the premiums you pay on a life insurance policy are always more than any death benefit, so the insurance company always comes out ahead.
• B) older people with a greater probability of dying during the term of a policy are denied any death benefits.
• C) the insurance company collects more than enough in premiums today to cover expected benefits payable today.
• D) life insurance companies are notorious for cheating clients with "fine print" policy clauses.

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Definitions:

Global North

A term used to refer to the world's developed, wealthy countries, primarily located in the Northern Hemisphere.

Global South

Developing Nations in Asia, Africa, and Latin America.

Mortality

The frequency or rate of death within a specific population or demographic.

Literacy Rate

The percentage of people within a population who are able to read and write at a specified age, reflecting the level of education and access to learning resources.