The method of paying a premium in life insurance contract in which premium payable increases as age increases is?

A. natural premium
B. level premium
C. risk premium
D. pure premium

Correct Answer: Option A

A. natural premium

Explanation

Loading the player… A risk premium is a return in excess of the risk-free rate of return investment is expected to yield; an asset’s risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.

A level premium is a type of insurance premium that is regularly associated with term life insurance. The term level premium basically means that you are going to have the same premium payment for the entire life of the policy.

The pure premium “refers to that portion of that rate needed to pay losses and loss-adjustment expenses”.

natural premium. : the amount required to meet the mortality cost of life insurance for each particular year and increasing from year to year for any given unit of protection.