An economically feasible premium is defined as what?

An economically feasible premium is defined as a premium that covers the insurer's costs while remaining attractive to potential policyholders. This balance is crucial in the insurance industry because an insurer must ensure that it can meet its financial obligations, such as claims payments and operational expenses. At the same time, if the premium is too high, it may deter prospective customers from purchasing insurance coverage.

This concept encompasses the need for affordability from the consumer's perspective and financial viability for the insurer. By setting premiums in this manner, insurers can maintain competitiveness in the market while also ensuring profitability and sustainability.

In contrast to the other options, a premium that is accepted by all potential insureds does not take into account the necessity of covering costs or maintaining attractiveness to the right market segment. A premium that guarantees profit for the insurer focuses solely on profitability without considering affordability for the insured, which can lead to a loss of customers. Lastly, a premium based solely on high-risk calculations might not acknowledge the broader financial context in which premiums need to be set, potentially leading to premiums that exclude a large portion of the market.