Which of the following is NOT a factor that affects the premium of insurance?

Which of the following is NOT a factor that affects the premium of insurance?

• A. Applicant's personal information
• B. Consumer Price Index
• C. Type of benefits requested
• D. Type of policy

Answer: (B)

The correct answer highlights a factor that generally does not have a direct impact on the premium of an individual insurance policy. The Consumer Price Index (CPI) reflects inflation and changes in the price level of a basket of consumer goods and services over time. While fluctuations in the CPI can influence the overall cost environment within which insurance companies operate, it does not specifically affect the premium charged to individual policyholders for their insurance coverage. In contrast, an applicant's personal information, such as age, health history, and driving records, plays a substantial role in determining premiums because insurers assess these factors to evaluate risk. The type of benefits requested and the type of policy significantly influence premiums as well, since different coverages and policy structures can carry varying levels of risk and associated costs. Thus, while the CPI is an important economic indicator, it does not directly affect the calculation of an individual’s insurance premium compared to the other listed factors.

The correct answer highlights a factor that generally does not have a direct impact on the premium of an individual insurance policy. The Consumer Price Index (CPI) reflects inflation and changes in the price level of a basket of consumer goods and services over time. While fluctuations in the CPI can influence the overall cost environment within which insurance companies operate, it does not specifically affect the premium charged to individual policyholders for their insurance coverage.

In contrast, an applicant's personal information, such as age, health history, and driving records, plays a substantial role in determining premiums because insurers assess these factors to evaluate risk. The type of benefits requested and the type of policy significantly influence premiums as well, since different coverages and policy structures can carry varying levels of risk and associated costs. Thus, while the CPI is an important economic indicator, it does not directly affect the calculation of an individual’s insurance premium compared to the other listed factors.