South Carolina Life Insurance Practice Exam

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for the South Carolina Life Insurance Exam. Utilize flashcards and multiple choice questions with detailed explanations to enhance your understanding. Ace your exam!

Practice this question and more.

Which term best describes the total gross annual premium?

Net premium
Premium plus expenses
Basic premium
Commission fees

The correct answer is: Premium plus expenses

The total gross annual premium is best described as the premium plus expenses. This definition encompasses the total amount a policyholder pays for life insurance, which includes not only the base premium for the coverage itself but also any additional costs that the insurer incurs in providing the policy. These expenses may include administrative fees, agent commissions, and other costs associated with underwriting and maintaining the policy. In life insurance, the gross premium is essential for understanding the insurer’s pricing structure, as it reflects all the costs needed to maintain the policy. By understanding that the gross premium is the sum of the base premium and the operational expenses, one can appreciate how insurers calculate the total cost for policyholders and ensure their business remains sustainable.