A liability for premiums paid in advance can also arise when insurers allow policyholders to pay several years’ premiums at one time.

A liability for premiums paid in advance can also arise when insurers allow policyholders to pay several years’ premiums at one time.

Since the insurer has the use of policyholder funds that are not yet due, it is customary for the insurer to:
A . Credit Assets
B . Discount the value of such premiums and accept a lesser amount in cash
C . Discount the value of such premiums
D . Accept a lesser amount in cash

View Answer

Answer: B