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Answer: A health insurance premium increases due to a higher cost for physician services, new technologies and/or hospital upgrades
**Correct answer: C** - Health insurance premiums commonly rise because **healthcare costs increase** overall, such as: - higher physician service costs, - expensive new technologies, - hospital upgrades, - broader claims inflation. - **A is false**: whole life premiums are generally set when the policy is issued and do not increase mid-policy because of shareholder dividend demands. - **B is false**: variable life premiums are typically not increased just because new genetic information emerges after policy issue. - **D is less likely** as stated: the policyholder’s later health problems affect claims experience, but not necessarily that individual's premium directly in the way described; health premium increases are more typically driven by **overall cost trends** and pooled risk experience.
Author: Manit Arora
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Q-21.5.3. Customers of insurance companies do not like to see their premiums increase, obviously. At the same time, most customers care about the claims process and quality: if the insurance doesn't pay out when it is needed, so the cheapest policy is not always the best! In regard to an increase in the premium(s), which of the following is MOST LIKELY to be TRUE?
A
A whole life insurance premium increases in the middle of the policy because the insurance company's shareholders have demanded an increase in the dividend
B
A variable life insurance premium increases because new genetic information (i.e., family tree insights) reduces the policy holder's life expectancy
C
A health insurance premium increases due to a higher cost for physician services, new technologies and/or hospital upgrades
D
A health insurance premium increases because the policyholder develops unexpected health problems that were unanticipated when the policy was written
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