Alberta General Insurance Level 1 Practice Exam

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How does direct billing of premiums work?

  1. Payment is collected by the broker

  2. Insured sends payment directly to the insurance company

  3. Payment is due only at the end of coverage

  4. Payment is optional

The correct answer is: Insured sends payment directly to the insurance company

Direct billing of premiums refers to a payment arrangement in which the insured sends the payment directly to the insurance company. This is different from option A, where the broker would collect the payment on behalf of the insurance company. Option C is incorrect because payment is typically due at the beginning of coverage, not the end. Additionally, option D is not correct because payment is mandatory in order to maintain coverage.

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