Pennsylvania Life and Health Insurance Exam Practice Question
The portion of the premium applied to purchase pure insurance is known as the:
Correct Answer: B
Rationale: The portion of the premium that directly covers the risk of death is referred to as the mortality cost. This amount reflects the insurer's obligation to pay out benefits upon the insured's death.
Option A, cash value, pertains to the savings component in certain life insurance policies, not the pure insurance cost.
Option C, loading charge, represents additional costs for administrative expenses and profit margins, rather than the pure insurance risk.
Option D, net premium, refers to the premium amount after subtracting loading charges, but it does not specifically denote the mortality cost.
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