The in-force method requires the computation of which premium charges?

Question

Options

• Afor the amount charged the insured
• Bfor the in-force premiums
• Cboth A and B
• DNeither A nor B

• A
  9% (2)
• B
  4% (1)
• C
  70% (16)
• D
  17% (4)

Explanation

Option C is correct because the in-force method is a premium computation approach that requires calculating both the premiums charged to the insured (the actual billed amounts) and the in-force premiums (premiums on currently active, unexpired policies). These two components work together to properly reflect the insurer's premium obligations and exposure during the policy period.

Option A alone is incomplete - knowing only what was charged to the insured doesn't capture which policies remain active, so you can't accurately assess ongoing risk exposure. Option B alone is similarly insufficient - tracking in-force premiums without referencing the amounts actually charged to insureds leaves the computation without a proper premium basis to work from.

Memory tip: Think of "in-force" as meaning "currently alive" - the method must account for what's being charged (A) and what's still active (B), because both dimensions are needed to fully describe a live policy's premium picture. When you see "in-force method," remember it's always a two-sided calculation: charge + activity = C.

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