Question
All the following are among the advantages of the yearly renewable term basis of reinsurance, EXCEPT: a) The primary company may not deduct the reserves
All the following are among the advantages of the yearly renewable term basis of reinsurance, EXCEPT:
a) The primary company may not deduct the reserves on reinsured policies from its overall reserve liabilities if the reinsurer is not licensed in the primary company
b) Yearly renewable term insurance is much easier to administer than is the coinsurance plan.
c) It is considered more appropriate for participating insurance that offers great flexibility through the operation of the dividend formula.
Hint:
The yearly renewable term plan is considered more appropriate for nonparticipating insurance because costs are fixed in advance.
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