In a monthly premium payment mode, which statement is true about the gross premium?

• A. The gross premium is higher on a monthly payment mode as compared to being paid annually.
• B. The gross premium is the same for monthly and annual payments.
• C. Monthly payments reduce the policy's death benefit.
• D. Monthly premiums are not allowed in life insurance.

Answer: (A)

The main idea is that the gross premium reflects the total amount charged by the insurer, including any extra costs tied to how you pay. When premium is paid monthly, the insurer adds a loading to cover the administrative costs and the financing of monthly billing. This makes the gross premium higher than paying the full annual amount up front. The actual amount needed to fund the policy’s mortality cost (the net premium) stays essentially the same regardless of payment frequency, and the policy’s death benefit isn’t affected by how you pay. Monthly premiums are allowed, so the other statements aren’t correct.