Regulations on Conduct of Business MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Regulations on Conduct of Business, a fundamental topic in the field of IC 14 Regulations of Insurance Business. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Regulations on Conduct of Business MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Regulations on Conduct of Business MCQs | Page 11 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q101.
What information must be provided to the policyholder related to investments, using the same font as an annual report?

a.

Details of market developments only

b.

Fund performance during the preceding financial year

c.

Risk control measures only

d.

Changes in interest rates only

Discuss
Answer: (b).Fund performance during the preceding financial year Explanation:The policyholder must be provided with full details related to investments, using the same font as an annual report, covering the fund performance during the preceding financial year, economic scenario, market developments, etc.
Q102.
What is the obligation of financial institutions regarding reporting to the Financial Intelligence Unit in India (FIU-IND)?

a.

Reporting all cash transactions regardless of the amount

b.

Reporting transactions involving proceeds of crime or financing terrorism

c.

Reporting transactions involving counterfeit currency notes

d.

Reporting all transactions exceeding Rs. 1 lakh

Discuss
Answer: (b).Reporting transactions involving proceeds of crime or financing terrorism Explanation:Financial institutions in India are obligated to report certain transactions to the Financial Intelligence Unit (FIU-IND), including suspicious transactions whether or not made in cash, which may involve proceeds of crime or financing of activities relating to terrorism. This duty helps in combating money laundering and terrorist financing activities.
Q103.
How long are records of transactions reported to the FIU required to be retained by insurance companies?

a.

5 years

b.

7 years

c.

10 years

d.

Indefinitely

Discuss
Answer: (c).10 years Explanation:Records of transactions reported to the Financial Intelligence Unit (FIU) are required to be retained by insurance companies for a period of 10 years beginning from the date of occurrence of the transaction. This ensures that there is a comprehensive audit trail for investigative purposes.
Q104.
According to para 14 of Part I of the circular issued by IRDA, when should unit statements be issued to policyholders?

a.

Only on policy anniversaries

b.

Only when a transaction takes place

c.

On every policy anniversary and when a transaction takes place

d.

Only during the maturity of the policy

Discuss
Answer: (c).On every policy anniversary and when a transaction takes place Explanation:Unit statements shall be issued on every policy anniversary and also as and when a transaction takes place, as per para 14 of Part I of the circular issued by IRDA.
Q105.
What does para 14.3 of Part I of the circular issued by IRDA state regarding unit statements?

a.

Unit statements are optional

b.

Unit statements shall be issued only during policy anniversaries

c.

Unit statements shall be issued on every policy anniversary and also as and when a transaction takes place

d.

Unit statements are not mandatory for ULIPs

Discuss
Answer: (c).Unit statements shall be issued on every policy anniversary and also as and when a transaction takes place Explanation:Para 14.3 of Part I of the circular issued by IRDA states that unit statements shall be issued on every policy anniversary and also as and when a transaction takes place.
Q106.
What should life insurance companies ensure when reporting past performance of funds in advertisements?

a.

High emphasis on past performance

b.

Use of technical jargon to convey sophistication

c.

Demonstrating a link between past performance and the future

d.

Clearly stating, in the same font, that past performance is not indicative of future performance

Discuss
Answer: (d).Clearly stating, in the same font, that past performance is not indicative of future performance Explanation:Life insurers are required to clearly state, in the same font, that past performance is not indicative of future performance when reporting past performance of funds in advertisements.
Q107.
What must be included in advertisements regarding the past performance of funds, if applicable?

a.

Compound annual returns for the previous three calendar years

b.

Corresponding benchmark index performance only

c.

Demonstrating a link between past performance and the future

d.

Compound annual returns for the previous five calendar years, expressing as a percentage rounded to the nearest 0.1%

Discuss
Answer: (d).Compound annual returns for the previous five calendar years, expressing as a percentage rounded to the nearest 0.1% Explanation:Advertisements, if including past performance, must show compound annual returns for the previous five calendar years, expressed as a percentage rounded to the nearest 0.1%.
Q108.
What information should an advertisement about Unit Linked products clearly distinguish?

a.

Distinction between different Unit Linked products

b.

Distinction between insurance agents and intermediaries

c.

Distinction between traditional Life Insurance products and Unit Linked products

d.

Distinction between premium and fund charges

Discuss
Answer: (c).Distinction between traditional Life Insurance products and Unit Linked products Explanation:An advertisement about Unit Linked products should clearly distinguish between traditional Life Insurance products and Unit Linked products so that prospective policyholders are not misled.
Q109.
What should an advertisement for Unit Linked Life Insurance products explicitly state regarding premiums and investment risks?

a.

Premiums are guaranteed against any investment risks

b.

The premium paid is not subject to any investment risks

c.

Premiums are not subject to investment risks associated with capital markets

d.

The premium paid is subject to investment risks associated with capital markets, and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market, and the insured is responsible for his/her decisions.

Discuss
Answer: (d).The premium paid is subject to investment risks associated with capital markets, and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market, and the insured is responsible for his/her decisions. Explanation:The advertisement should explicitly state that the premium paid is subject to investment risks associated with capital markets, and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market, and the insured is responsible for his/her decisions.
Q110.
What is the essential ingredient of a life insurance product, according to the guidelines for product design?

a.

Premium amount

b.

Investment returns

c.

Benefit payable on death

d.

Policy term

Discuss
Answer: (c).Benefit payable on death Explanation:The essential ingredient of a life insurance product, according to the guidelines for product design, is the benefit payable on death. The guidelines emphasize the importance of the insurance element in life insurance products.
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