All the following statements concerning the reinsurance of life risks on the coinsurance plan are correct, EXCEPT:

a) The reinsurer assumes a share of the risk according to the terms that govern the original policy.

b) If the reinsurer accepted 30% of the face amount, it would be entitled to receive 30% of the premium.

c) The reinsurance plan is based on the same type of policy issued by the primary company.

d) The reinsurer is responsible for its pro rata share of the primary company's dividend to the policyowner.

Hint:

The direct writer does not pass on to the reinsurer the full pro rata share of the premium. The direct writer deducts something for the agent's commission, premium taxes, and other expenses.