Regulations on Conduct of Business MCQs

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Regulations on Conduct of Business MCQs | Page 17 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q161.
What was the debate in 2010 regarding the regulation of ULIPs, and who were the two regulators involved?

a.

Whether ULIPs should be regulated by the government, and SEBI and IRDA were both involved

b.

Whether ULIPs should be regulated by RBI, and SEBI and IRDA were both involved

c.

Whether ULIPs should be regulated by SEBI or IRDA, with a dispute between the two regulators

d.

Whether ULIPs should be self-regulated, and SEBI and IRDA were both involved

Discuss
Answer: (c).Whether ULIPs should be regulated by SEBI or IRDA, with a dispute between the two regulators Explanation:In 2010, there was a debate over whether ULIPs should be regulated by IRDA, which historically regulated them as insurance products, or by SEBI due to the investment component. A dispute arose between the two regulators.
Q162.
What was the main issue in the dispute between SEBI and IRDA regarding ULIPs?

a.

The premium amounts of ULIPs

b.

The mandatory insurance element in ULIPs

c.

The investment component of ULIPs

d.

The marketing strategy of ULIPs

Discuss
Answer: (c).The investment component of ULIPs Explanation:The dispute between SEBI and IRDA primarily revolved around the investment component of ULIPs, with SEBI asserting that the 14 companies needed its approval to launch ULIPs.
Q163.
What was the role of the government in resolving the dispute between SEBI and IRDA regarding ULIPs?

a.

The government sided with SEBI and transferred regulation to SEBI

b.

The government issued an ordinance declaring ULIPs to be regulated by IRDA

c.

The government created a new regulatory body specifically for ULIPs

d.

The government stayed neutral and did not intervene in the dispute

Discuss
Answer: (b).The government issued an ordinance declaring ULIPs to be regulated by IRDA Explanation:The government intervened and issued an ordinance, declaring that ULIPs would continue to be regulated by IRDA, effectively resolving the dispute.
Q164.
What were the significant changes introduced by IRDA after the government intervention in 2010?

a.

ULIPs were completely abolished

b.

The cost structure of ULIPs was increased

c.

ULIPs were made more investor-friendly, with a major overhaul of their cost structure

d.

ULIPs were limited to only certain insurance companies

Discuss
Answer: (c).ULIPs were made more investor-friendly, with a major overhaul of their cost structure Explanation:After the government intervention, IRDA passed new guidelines resulting in a major overhaul of ULIPs, making them more investor-friendly by reducing the cost structure.
Q165.
What does a Unit represent in a Unit Linked Insurance Policy (ULIP)?

a.

A component of the fund in a ULIP

b.

A measure of the policyholder's life cover

c.

A fixed premium amount in a ULIP

d.

A regulatory body overseeing ULIP operations

Discuss
Answer: (a).A component of the fund in a ULIP Explanation:In a ULIP, a Unit is a component of the fund, and the policyholder's investment in the fund is denoted in the form of units.
Q166.
What is the primary factor determining the returns from a Unit Linked Insurance Plan (ULIP)?

a.

The premium amount paid by the policyholder

b.

The policyholder's age and health condition

c.

The performance of the fund in which the ULIP is invested

d.

The insurance company's profit margin

Discuss
Answer: (c).The performance of the fund in which the ULIP is invested Explanation:The returns from a ULIP are dependent upon the performance of the fund in which it is invested.
Q167.
What option does a policyholder have regarding investment in ULIP funds?

a.

They can only invest in a single fund throughout the policy term

b.

They cannot switch or redirect their investments once made

c.

They have the option to invest in more than one fund (redirection) and can switch between funds

d.

They can only invest in equity funds

Discuss
Answer: (c).They have the option to invest in more than one fund (redirection) and can switch between funds Explanation:A ULIP policyholder has the option to invest in more than one fund (redirection) and can switch or change existing investments from one fund to another.
Q168.
What does the term "redirection" refer to in the context of ULIPs?

a.

Shifting the fund corpus to a different insurer

b.

Investing in a conservative fund

c.

The policyholder's option to invest in more than one fund

d.

The policyholder's choice to switch between debt and equity funds

Discuss
Answer: (c).The policyholder's option to invest in more than one fund Explanation:"Redirection" in the context of ULIPs refers to the policyholder's option to invest in more than one fund.
Q169.
What types of funds are typically offered under ULIP schemes by insurance companies?

a.

Only equity funds

b.

Conservative fund, balance fund, and aggressive fund

c.

Mutual funds and fixed deposits

d.

Debt securities and government bonds

Discuss
Answer: (b).Conservative fund, balance fund, and aggressive fund Explanation:Insurance companies typically offer conservative fund, balance fund, and aggressive fund under ULIP schemes.
Q170.
Which regulatory authority governs ULIPs?

a.

Securities and Exchange Board of India (SEBI)

b.

Reserve Bank of India (RBI)

c.

Insurance Regulatory and Development Authority (IRDA)

d.

Ministry of Finance

Discuss
Answer: (c).Insurance Regulatory and Development Authority (IRDA) Explanation:ULIP is an insurance product and is governed by the Insurance Regulatory and Development Authority (IRDA), not by SEBI.
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