A customer cancels a twelve-month policy after four months. How much do you refund?

Short answer

It depends on who cancelled and why: pro rata returns the unused share, short rate keeps a penalty, and which applies is set by the policy wording and the jurisdiction rather than by the system.

Keep policy administration explicit in the answer because that is the concept the interviewer is actually trying to test. A good policy administration explanation names the trade-off, the failure mode, and the evidence you would use before choosing. Use policy administration once more at the decision point so the answer reads as judgement rather than a detached example.

Keep policy administration explicit in the answer because that is the concept the interviewer is actually trying to test. A good policy administration explanation names the trade-off, the failure mode, and the evidence you would use before choosing.