Home › B.Com Banking & Insurance › Banking and Finance › Money and Financial Institutions › What are the payments a policyholder makes to an…
What are the payments a policyholder makes to an insurer called?
APremiums, paid to buy financial protection
BDividends, paid out of the insurer profit
CAnnuities, paid monthly after retirement
DCommissions, paid to the selling agent
Answer & Solution
Correct answer: A. Premiums, paid to buy financial protection
1. A policyholder pays an insurance company in order to buy financial protection.
2. Those payments are called premiums.
3. The premium flows from the policyholder to the insurer, which is the direction that distinguishes it.
4. Commissions flow from the insurer to an agent, so they travel the other way.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 15 "Understanding Money and Financial Institutions", section 15.3 U.S. Financial Institutions_
Related questions
Why can a large payment processor spot fraud better than a single merchant can?A banking chatbot is best described as what?Which service channel costs a bank the most to provide?What is happening to branch banking as mobile services spread?Which services do fintech firms typically provide?What makes international banking a high-risk venture?Why can lighter regulation abroad make life hard for a bank expanding overseas?Why do large banks look beyond their own national borders?