Question

If the amount of premium paid on an insurance policy is Rs 4000 and the total insurance amount is Rs 200,000, what is the rate of premium?

a) 1%
b) 2%
c) 2.5%
d) 3%

Answer 1

The rate of premium for the insurance policy is 2%.

Step-by-step explanation:

To find the rate of premium, you need to divide the amount of premium paid by the total insurance amount and then multiply by 100 to get the percentage. In this case, the premium paid is Rs 4000 and the total insurance amount is Rs 200,000. So the rate of premium can be calculated as:

Rate of premium = (Premium paid / Total insurance amount) x 100

Rate of premium = (4000 / 200000) x 100 = 2%

Therefore, the rate of premium is 2% (option b).