Under the Traditional Net Cost Method,the Net Cost of Life

question 43

Multiple Choice

Under the traditional net cost method,the net cost of life insurance for a given period (e.g. ,20 years) is determined by which of the following formulas?

• A)the total premiums for the period less the policy reserve at the end of the period
• B)the total premiums for the period less the sum of the total dividends received during the period and the cash value at the end of the period
• C)the sum of the total premiums and dividends for the period less the cash value at the end of the period
• D)the sum of the total dividends received during the period and the cash value at the beginning of the period less the total premiums paid for the period

---

Definitions:

Ordinary Course

Actions and transactions that are considered normal or routine within the scope of a business's operations or an individual's usual undertakings.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Unsecured Parties

Creditors or entities that hold claims or debts without a guarantee or collateral to secure the debt.

Secured Creditors

are creditors who hold a security interest in the debtor's assets as collateral for the money lent, giving them a claim to such assets in case of default.