Importance of Product Design MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Importance of Product Design, a fundamental topic in the field of IC 92 Actuarial Aspects of Product Development. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Importance of Product Design 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 Importance of Product Design mcq questions that explore various aspects of Importance of Product Design problems. Each MCQ is crafted to challenge your understanding of Importance of Product Design principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 92 Actuarial Aspects of Product Development tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Importance of Product Design MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Importance of Product Design MCQs | Page 1 of 10

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Q1.
Why do insurance companies focus on product design?

a.

To decrease revenue growth

b.

To achieve consistent revenue growth

c.

To avoid organic growth

d.

To limit product features

Discuss
Answer: (b).To achieve consistent revenue growth Explanation:Insurance companies focus on product design to achieve consistent and organic growth in revenue by offering well-designed products with desirable features and competitive pricing.
Q2.
What does the design of an insurance product primarily encompass?

a.

Only benefits offered

b.

Only price charged

c.

Both benefits offered and price charged

d.

Neither benefits nor price

Discuss
Answer: (c).Both benefits offered and price charged Explanation:The design of an insurance product includes both the benefits offered, such as coverage for uncertainties like death or sickness, and the price charged for the coverage.
Q3.
Which of the following is an example of a guarantee offered in an insurance product?

a.

Payment every 5 years

b.

Surrender options

c.

Policy loan

d.

Maturity benefit not less than total premiums paid

Discuss
Answer: (d).Maturity benefit not less than total premiums paid Explanation:A guarantee offered in an insurance product could be ensuring that the maturity benefit will not be less than a certain percentage of the total premiums paid, typically 100%.
Q4.
Why is new product design required in the insurance market?

a.

To reduce customer base

b.

To maintain stagnant profits

c.

To address gaps and improve products

d.

To ignore market changes

Discuss
Answer: (c).To address gaps and improve products Explanation:New product design is necessary in the insurance market to address gaps in existing products, improve features, and adapt to changing market conditions and customer needs.
Q5.
What could lead to an awareness of a gap in the existing product range?

a.

Decrease in risk aversion

b.

Legislative changes

c.

Increase in market competition

d.

Lower service tax rates

Discuss
Answer: (b).Legislative changes Explanation:Legislative changes, such as tax policy adjustments, can lead to an awareness of gaps in existing product ranges, prompting companies to consider new product designs to remain competitive and attractive to customers.
Q6.
Which factor might result in inadequate premium rates for non-linked products?

a.

Increase in future investment outlook

b.

Change in demographics

c.

Decrease in shareholder's preferences

d.

Inefficient use of capital

Discuss
Answer: (b).Change in demographics Explanation:Changes in demographics, such as mortality rates or lapse rates, can lead to inadequate premium rates for non-linked products, necessitating a review of product designs to ensure profitability and competitiveness.
Q7.
What is the primary factor influencing product design?

a.

Profitability

b.

Sensitivity of profit

c.

Customer needs

d.

Innovation

Discuss
Answer: (c).Customer needs Explanation:The primary factor influencing product design is the assessment of customer needs, as it serves as a crucial bridge between creativity and meeting customer demands.
Q8.
Why is profitability considered an important factor in product design?

a.

To maximize customer satisfaction

b.

To ensure long-term survival of the company

c.

To minimize innovation costs

d.

To decrease product complexity

Discuss
Answer: (b).To ensure long-term survival of the company Explanation:Profitability is essential in product design to ensure the long-term survival of the company by covering future expenses, providing benefits, and maintaining a profit margin.
Q9.
In which type of design is sensitivity of profit particularly relevant?

a.

Non-linked design

b.

Unit linked design

c.

Hybrid design

d.

Variable design

Discuss
Answer: (b).Unit linked design Explanation:Sensitivity of profit is particularly relevant in unit linked design, where various charges can be adjusted to reduce sensitivity to specific risks such as investment returns, mortality rates, and expenses.
Q10.
How can sensitivity of profitability to high withdrawal rates be reduced?

a.

Offering guaranteed surrender values

b.

Minimizing commission for early withdrawals

c.

Increasing product complexity

d.

Eliminating withdrawal options

Discuss
Answer: (b).Minimizing commission for early withdrawals Explanation:Sensitivity of profitability to high withdrawal rates can be reduced by implementing a commission system with "clawback" provisions, where commission is partially returned for early withdrawals, thus mitigating the impact on profitability.
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