New York Child Abuse Identification and Reporting Practice Exam

Which term refers to how frequently premiums are paid?

1. Annual premium

2. Mode

3. Premium schedule

4. Payment frequency

The correct answer is: Mode

The term that refers to how frequently premiums are paid is "mode." In the context of insurance, the mode indicates the interval at which premiums can be paid, such as annually, semi-annually, quarterly, or monthly. Understanding the mode is essential for policyholders as it affects cash flow and budgeting decisions, as well as the overall cost of the policy due to potential variations in premium pricing based on the frequency of payments. Other terms provided, such as "annual premium" and "premium schedule," denote specific payment plans or the total cost due on a yearly basis rather than the frequency aspect itself. "Payment frequency" is also a relevant term, but it is more of a descriptor of the concept rather than the technical term used to define the actual frequency of premium payments. Thus, "mode" precisely captures the idea of frequency within the context of insurance premiums.