Froogle | Glossary | 'Annual Claim Cost'

the net annual cost [per unit of benefit] before:

• the addition of expenses (including claim settlement expenses);

• a margin for profit; and/or

• a margin for other contingencies.

EXAMPLE:

John Doe is a 35-year old construction worker. He owns a disability insurance policy. It will pay him a benefit of $100/month. John’s policy has: (i) a maximum disability benefit period of one year; and (ii) an elimination period of one week. The annual claim cost for such a policy equals $12/month; while the gross premium is $18. The additional $6 (ie, $18 minus $12) would cover expenses and profit (and other contingencies).

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Froogle 1.1.1.7

ANNUAL CLAIM COST

EXAMPLE:

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