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 26 of 32

Discover more Topics under IC 14 Regulations of Insurance Business

Q251.
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.
Q252.
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.
Q253.
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.
Q254.
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.
Q255.
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.
Q256.
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.
Q257.
When is the Fund Management Charge (FMC) usually levied?

a.

At the time of policy issuance

b.

At the time of policy maturity

c.

At the time of computation of NAV

d.

At the time of premium payment

Discuss
Answer: (c).At the time of computation of NAV Explanation:The Fund Management Charge (FMC) is typically levied at the time of computation of Net Asset Value (NAV), which is usually done on a daily basis.
Q258.
What does the Policy Administration Charge represent?

a.

Fund management expenses

b.

Fixed charges applied to the premium

c.

Expenses other than those covered by premium allocation charges and fund management expenses

d.

Charges for policy cancellation

Discuss
Answer: (c).Expenses other than those covered by premium allocation charges and fund management expenses Explanation:The Policy Administration Charge represents expenses other than those covered by premium allocation charges and fund management expenses. This charge may be expressed as a fixed amount or a percentage of the premium or sum assured.
Q259.
How is the Surrender Charge calculated?

a.

As a fixed amount deducted from the policy fund

b.

As a percentage of the sum assured

c.

As a percentage of the premium

d.

As a percentage of the fund or as a percentage of the annualized premiums

Discuss
Answer: (d).As a percentage of the fund or as a percentage of the annualized premiums Explanation:The Surrender Charge is usually expressed either as a percentage of the fund or as a percentage of the annualized premiums for regular premium contracts. This charge is levied on the unit fund at the time of surrender of the contract, i.e., pre-mature closure of the policy.
Q260.
What does the Switching Charge refer to?

a.

A charge levied on the premium payment

b.

A charge levied on the sum assured

c.

A charge levied on switching of monies from one fund to another within the product

d.

A charge levied on policy administration

Discuss
Answer: (c).A charge levied on switching of monies from one fund to another within the product Explanation:The Switching Charge is a charge levied on switching (transfer) of monies from one fund to another fund available within the product. This charge is applied at the time of effecting the switch and is typically a flat amount per each switch.
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