Question

1. how do insurance companies calculate the premium amount?

a. based on the age of the policyholder only
b. using probability and risk assessment of the insured item or person
c. from the number of claims the company received in a year
d. by the total number of policyholders they have

Explanation:

Insurance companies use probability and risk assessment. Age (option a) is just one factor. Number of claims (option c) affects claims handling but not premium calculation. Total policyholders (option d) doesn't directly determine an individual's premium. Probability and risk assessment (option b) consider multiple factors like age, health (for life/health), value and risk (for property), etc., to calculate a fair premium.

Answer:

B. Using probability and risk assessment of the insured item or person