Which of the following is an example of a premium payment mode?

The correct answer identifies an example of a premium payment mode, which refers to how often an insurance premium is paid to the insurer. Premium payment modes can vary in frequency, and they typically include options such as monthly, quarterly, bi-annual, or annual payments.

Choosing annual premium payment as the example highlights a specific mode where the entire year's premium is paid at once. This can often lead to a lower overall cost compared to more frequent payment methods due to potential discounts, and it simplifies the management of premium payments for both the insured and the insurer.

Understanding the different types of premium payment modes is essential in insurance as they can affect the total amount paid over time, cash flow management for policyholders, and the administrative processes for insurance companies.