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GenaCL600 [577]
3 years ago
6

Use the following scenario for the question below. A group of 100 people seeks out an insurance company to underwrite health ins

urance for its members. The expected medical spending for the group is $150,000. Assume a net loading cost of 15 percent. If an additional 10 people, who have expected medical spending of $5,000 per person on average, join the group, the new premium will be approximately: a. $2,100. b. $2,300. c. $1,818. d. $3,090. e. $5,822.
Business
1 answer:
makvit [3.9K]3 years ago
7 0

Answer:

c. $1,818.

Explanation:

Average premium = ( Expected medical cost + increase in medical spending + loading cost ) / 100

Average premium = ( $150,000 + $5,000 + 15% ) / 100

Average premium = $1,818.

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