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Which type of life insurance charges higher premiums?

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Life insurance companies require applicants to submit to a physical examination as proof of insurabiltiy prior to issuing standard life insurance policies. In contrast, credit card companies offer their customer a type of insurance called "credit life insurance" which pays off the credit card balance if the cardharolder dies. Would you expect insurance premiums to be higher (per dollars of death benefits) on standard life or credit life policies? Explain.

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Solution Summary

This solution predicts which of two types of life insurance will charge higher premiums and explains why.

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