Important Terms and Definitions MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Important Terms and Definitions, 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 Important Terms and Definitions MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Important Terms and Definitions MCQs | Page 1 of 6

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q1.
What is the definition of death benefit?

a.

The benefit payable upon maturity of the policy

b.

The benefit payable upon surrender of the policy

c.

The benefit payable upon death as specified in the policy document

d.

The benefit payable upon lapse of the policy

Discuss
Answer: (c).The benefit payable upon death as specified in the policy document Explanation:Death benefit refers to the benefit agreed at the inception of the contract, which is payable on death as specified in the policy document.
Q2.
What does discontinuance of a policy mean?

a.

Surrendering the policy after the grace period

b.

Non-payment of premium after the grace period

c.

Conversion of the policy into a paid-up policy

d.

Policy reaching the end of the term

Discuss
Answer: (b).Non-payment of premium after the grace period Explanation:Discontinuance of a policy refers to the state of a policy that could arise on account of non-payment of the contractual premium due before the expiry of the notice period as per regulation.
Q3.
What is the Discontinued Policy Fund / Discontinued Policy Account Value?

a.

A fund set aside for paying policy benefits

b.

A segregated fund constituted by the fund value of all active policies

c.

A segregated fund constituted by the fund value of all discontinued policies

d.

A fund set aside for insurer's administrative expenses

Discuss
Answer: (c).A segregated fund constituted by the fund value of all discontinued policies Explanation:The Discontinued Policy Fund / Discontinued Policy Account Value is the segregated fund/policy account of the insurer that is constituted by the fund value/policy account value of all the discontinued policies.
Q4.
What is the grace period in insurance policies?

a.

The period within which the policyholder can surrender the policy without penalty

b.

The period within which the policyholder can convert the policy into a paid-up policy

c.

The time granted by the insurer for premium payment without penalty after the due date

d.

The time granted by the insurer for policy renewal after the expiry date

Discuss
Answer: (c).The time granted by the insurer for premium payment without penalty after the due date Explanation:Grace period refers to the time granted by the insurer from the due date for the payment of premium, during which time the policy is considered to be in-force without any interruption as per the terms of the policy.
Q5.
What are limited premium payment products?

a.

Products with limited coverage duration

b.

Products with limited benefits

c.

Products with limited premium payment period compared to the policy term

d.

Products with limited eligibility criteria

Discuss
Answer: (c).Products with limited premium payment period compared to the policy term Explanation:Limited premium payment products refer to non-linked insurance products where the premium payment period is limited/shorter compared to the policy term and are paid at regular intervals like yearly, half-yearly, etc.
Q6.
What is the lock-in period in insurance policies?

a.

The period during which policyholders cannot surrender their policies

b.

The period during which policy proceeds cannot be paid except in certain circumstances

c.

The period during which policyholders can make partial withdrawals

d.

The period during which policyholders can switch to a different policy

Discuss
Answer: (b).The period during which policy proceeds cannot be paid except in certain circumstances Explanation:Lock-in period refers to the period of five consecutive years from the date of commencement of the policy, during which the proceeds of the discontinued policies cannot be paid by the insurer to the policyholder or to the insured, except in specific circumstances.
Q7.
What is maturity benefit?

a.

The benefit payable upon death of the insured

b.

The benefit payable upon discontinuance of the policy

c.

The benefit payable at the end of the policy term

d.

The benefit payable upon policy surrender

Discuss
Answer: (c).The benefit payable at the end of the policy term Explanation:Maturity benefit refers to the benefit payable on maturity, i.e., at the end of the term, as specified in the policy document.
Q8.
What does Net Asset Value (NAV) represent?

a.

Total value of all assets held by the insurer

b.

Price per unit of the Segregated Fund

c.

Total liabilities of the insurer

d.

Annual premium paid by the policyholder

Discuss
Answer: (b).Price per unit of the Segregated Fund Explanation:Net Asset Value (NAV) represents the price per unit of the Segregated Fund.
Q9.
What are partial withdrawals in insurance?

a.

Withdrawal of the entire policy amount

b.

Withdrawal of a portion of the fund by the policyholder during the policy term

c.

Withdrawal of premiums paid in excess of the sum assured

d.

Withdrawal of premiums paid after the grace period

Discuss
Answer: (b).Withdrawal of a portion of the fund by the policyholder during the policy term Explanation:Partial Withdrawals refer to any part of the fund/partial withdrawal that is encashed/withdrawn by the policyholder during the period of the contract.
Q10.
What are regular premium products?

a.

Products with irregular premium payment intervals

b.

Products with limited premium payment period

c.

Products with premium payment throughout the term at regular intervals

d.

Products with single premium payment option

Discuss
Answer: (c).Products with premium payment throughout the term at regular intervals Explanation:Regular Premium Products refer to non-linked insurance products where the premium payment is throughout the term of the product and are paid in regular intervals like yearly, half-yearly, etc.
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