SOFA-CFE Exam Questions and Answers

Which of the following is the correct formula to calculate the earned premium?

Earned premium = (Policy premium x Unexpired coverage days) / Total number of days in the policy
Earned premium = (Interest premium + Unexpired coverage days) / Total number of days in the policy
Earned premium = (Policy premium x expired coverage days) / Total number of days in the policy
Earned premium = (Overhead premium _ Unexpired coverage days) / Total number of days in the policy

Answer(s): C

Requiring the expense items relating to policy issuance to be expensed as a period cost at the time the policy is written is called:

Answer(s): A

Which of the following is Correct?

Under the monthly pro rata method, the policy year is divided into two equal parts, with the first month and the last month of the policy year earning only 1/2 of the premium.
Under the monthly pro rata method, the policy year is divided into twelve equal parts, with the first month and the last month of the policy year earning only 1/12 of the premium.
Under the monthly pro rata method, the policy year is divided into twenty-four equal parts, with the first month and the last month of the policy year earning only 1/24 of the premium.
Under the monthly pro rata method, the policy year is divided into forty-eight equal parts, with the first month and the last month of the policy year earning only 1/48 of the premium.

Answer(s): C