Question

Assume you are buying insurance for your home. Your agent tells you that the pure premium is $300 and that the insurance company charges a loading of 5% of the gross premium. How much is your total premium?

Answer 1

Answer:

$ 315

Explanation:

Given that

Pure premium = $300

Insurance company charges = 5%

Thus,

Amount of insurance company changes = 300 × 5%

= 300 × 0.05

= $15

Therefore,

Total premium = pure premium + insurance company charges

= 300 + 15

= $ 315

Note that: Premium is simply the amount to be paid regularly to an insurance company for an insurance policy. It is the money paid periodically by the insured to the insurer.