A Liability for Premiums Paid in Advance Can Also Arise

question 211

Multiple Choice

A liability for premiums paid in advance can also arise when insurers allow policyholders to pay several years' premiums at one time. Since the insurer has the use of policyholder funds that are not yet due, it is customary for the insurer to:

• A) Credit Assets
• B) Discount the value of such premiums and accept a lesser amount in cash
• C) Discount the value of such premiums
• D) Accept a lesser amount in cash

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Definitions:

Active Accounts

Refers to accounts that are currently in use or operation, especially in the context of banking or financial services.

Statistically Significant

A measure indicating that the likelihood of an observed effect in a dataset is not due to chance, typically determined by a p-value.

Multiple Regression

A statistical technique used to model and analyze the relationships between a dependent variable and two or more independent variables.

Simple Linear Regression

A statistical method that models the relationship between two variables by fitting a linear equation to observed data.