Which of the following statements about the use of interest-adjusted cost data for comparing life insurance policies is (are) true?
I. Using interest-adjusted cost data provides a more accurate measure of the cost of life insurance than is provided if the time value of money is ignored.
II. Its use is most appropriate in deciding between policies when the cost variation is very small.
A) I only
B) II only
C) both I and II
D) neither I nor II
Question 2
Under the traditional net cost method, the net cost of life insurance for a given period (e.g., 20 years) is determined by which of the following formulas?
A) the total premiums for the period less the policy reserve at the end of the period
B) the total premiums for the period less the sum of the total dividends received during the period and the cash value at the end of the period
C) the sum of the total premiums and dividends for the period less the cash value at the end of the period
D) the sum of the total dividends received during the period and the cash value at the beginning of the period less the total premiums paid for the period
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