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.

In this section, you'll find a wide range of Regulations on Conduct of Business mcq questions that explore various aspects of Regulations on Conduct of Business problems. Each MCQ is crafted to challenge your understanding of Regulations on Conduct of Business principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 14 Regulations of Insurance Business tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Regulations on Conduct of Business MCQs are your pathway to success in mastering this essential IC 14 Regulations of Insurance Business topic.

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Regulations on Conduct of Business MCQs | Page 15 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q141.
How are the premiums payable on a rider policy treated?

a.

They are completely separate from the main policy premiums

b.

They are not bifurcated into costs and expenses

c.

They include the cost of relevant expenses

d.

They are paid directly to the insurer

Discuss
Answer: (c).They include the cost of relevant expenses Explanation:The premiums payable on a rider policy include the cost of relevant expenses, as per Regulation 3 (1) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002. It is required that these expenses be bifurcated into costs and expenses, ensuring transparency and accountability in the premium structure.
Q142.
What does allowing appropriation of the cost of riders by cancellation of the units ensure?

a.

Increased profits for the insurer

b.

Continuation of the rider benefits

c.

Decreased costs for the policyholder

d.

Higher returns on investment

Discuss
Answer: (b).Continuation of the rider benefits Explanation:Allowing appropriation of the cost of riders by cancellation of the units ensures the continuation of the rider benefits. This mechanism helps policyholders maintain their rider benefits even in dynamic market conditions.
Q143.
According to IRDA (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010, what options do discontinued policyholders have?

a.

They must continue paying premiums indefinitely

b.

They can only withdraw the entire funds from the underlying ULIP funds

c.

They can either revive the policy or withdraw the entire funds

d.

They can only withdraw funds after the lock-in period

Discuss
Answer: (c).They can either revive the policy or withdraw the entire funds Explanation:Discontinued policyholders have the option to either revive the policy within the terms and conditions governing it or withdraw the entire funds from the underlying ULIP funds, according to IRDA (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010. This provides flexibility and choices to policyholders facing financial uncertainties.
Q144.
What happens if a policyholder does not exercise any option upon receiving a notice from the insurer?

a.

The policy automatically gets canceled

b.

The insurer must continue providing coverage

c.

The insurer may consider a complete withdrawal from ULIP funds

d.

The policyholder loses all rights to the policy

Discuss
Answer: (c).The insurer may consider a complete withdrawal from ULIP funds Explanation:If a policyholder does not exercise any option within 30 days of receiving a notice from the insurer, the insurer may consider that the policyholder has opted for a complete withdrawal from ULIP funds with no risk cover. This highlights the importance of timely decision-making for policyholders in managing their insurance policies.
Q145.
Why are insurers advised to obtain ratings for their respective unit linked funds?

a.

To increase profits

b.

To make choices difficult for the public

c.

To help policyholders in comparing fund performances

d.

To avoid regulatory scrutiny

Discuss
Answer: (c).To help policyholders in comparing fund performances Explanation:Insurers are advised to obtain ratings for their unit linked funds to assist policyholders in comparing fund performances. Ratings provide valuable insights for policyholders when making investment decisions in the dynamic market of ULIPs.
Q146.
What should retail investors be aware of regarding ratings of unit linked funds?

a.

Ratings are indicative of future performance

b.

Ratings are a perfect yardstick for investment decisions

c.

Ratings do not consider operational practices

d.

Ratings may vary based on premium payment frequency

Discuss
Answer: (a).Ratings are indicative of future performance Explanation:Retail investors should be aware that ratings of unit linked funds are not indicative of future performance. Additionally, they should understand the factors backing such ratings, including operational practices. This knowledge is essential for making informed investment choices.
Q147.
What does Premium Allocation Charge (PAC) refer to?

a.

The portion of premium utilized to purchase units for the policyholder

b.

The premium paid by policyholders

c.

The charge levied on policyholders for policy administration

d.

The charge levied at the time of policy maturity

Discuss
Answer: (a).The portion of premium utilized to purchase units for the policyholder Explanation:Premium Allocation Charge (PAC) refers to the percentage of the premium appropriated towards charges, with the balance utilized to purchase units for the policyholder. This charge is deducted at the time of receipt of premium.
Q148.
How is the Premium Allocation Charge (PAC) calculated?

a.

It is a fixed amount for all premiums

b.

It is a percentage of the policyholder's age

c.

It varies based on premium year, size, frequency, and type

d.

It is determined by the insurer's profit margin

Discuss
Answer: (c).It varies based on premium year, size, frequency, and type Explanation:The Premium Allocation Charge (PAC) varies based on factors such as the premium year, size, frequency, and type. It is explicitly stated as a percentage of the premium received and can vary accordingly.
Q149.
What happens to the balance amount of premium after deducting the Premium Allocation Charge (PAC)?

a.

It is returned to the policyholder

b.

It is used for policy administration

c.

It is utilized to purchase units for the policyholder

d.

It is invested in external funds

Discuss
Answer: (c).It is utilized to purchase units for the policyholder Explanation:After deducting the Premium Allocation Charge (PAC), the balance amount of premium is utilized to purchase units for the policyholder. This ensures that a portion of the premium is invested to generate returns for the policyholder.
Q150.
What does Fund Management Charge (FMC) represent?

a.

Expenses covered by premium allocation charges

b.

Charges levied on the value of assets

c.

Charges levied on the premium payment

d.

Charges levied on the sum assured

Discuss
Answer: (b).Charges levied on the value of assets Explanation:Fund Management Charge (FMC) is a charge levied as a percentage of the value of assets. This charge is adjusted by modifying the Net Asset Value (NAV) and is typically computed on a daily basis.
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