Question 19

Mortality is the component of a life insurance premium that is based on the insured's age and gender.

The mortality component of a life insurance premium reflects the statistical likelihood of death, which is influenced by factors such as the insured's age and gender.

A) Expense

The expense component of a life insurance premium relates to the operational costs of providing the insurance, including administrative costs, commissions, and other overhead. It does not directly relate to the insured's age or gender.

B) Interest

The interest component pertains to the investment income that the insurance company expects to earn on the premiums collected. This factor does not consider the insured's age or gender, making it irrelevant to the question.

C) Morbidity

Morbidity refers to the incidence of disease or disability within a population and is primarily relevant to health insurance rather than life insurance. Therefore, it does not apply to the calculation of premiums based on age and gender.

D) Mortality

Mortality is the correct component as it directly correlates with the probability of death, which is significantly influenced by the insured's age and gender. Insurance companies utilize mortality tables that account for these factors to determine premium rates.

Conclusion

Mortality is definitively the correct answer as it specifically involves the statistical likelihood of death related to age and gender, which are critical factors in determining life insurance premiums. The other options—expense, interest, and morbidity—do not address the question's focus on age and gender influence on premium calculations.