Even If an Insurance Company Holds a Substantial Reserve to Pay

question 67

True/False

Even if an insurance company holds a substantial reserve to pay claims, the algebra of probability shows that its funds are likely to be exhausted in payouts.

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Definitions:

Bonus Plan

A form of variable pay where employees receive additional compensation on top of their base salary, typically based on performance or achieving certain targets.

Frequency of Payouts

Refers to how often employees receive their earnings, such as weekly, bi-weekly, monthly, or quarterly.

Bonus Allocation

is the distribution of financial rewards to employees beyond their regular pay, typically based on performance or company profit.

Gain Sharing

A performance-related pay strategy that offers employees financial rewards based on improvements in productivity, efficiency, or profitability within their work group or organization.