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 2 of 6

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q11.
What are rider benefits in insurance?

a.

Additional benefits added to the main policy

b.

Benefits payable upon policy surrender

c.

Benefits payable at the end of the policy term

d.

Benefits payable in case of discontinuance of the policy

Discuss
Answer: (a).Additional benefits added to the main policy Explanation:Rider benefits refer to an amount of benefit payable on a specified event offered under the rider, which is allowed as an add-on benefit to the main benefit.
Q12.
What is the revival of a policy?

a.

Surrendering the policy for a refund

b.

Cancelling the policy due to non-payment of premium

c.

Restoration of a discontinued policy by the insurer upon payment of due premiums

d.

Altering the terms of the policy

Discuss
Answer: (c).Restoration of a discontinued policy by the insurer upon payment of due premiums Explanation:Revival of a policy refers to the restoration of a discontinued policy by the insurer with all the benefits mentioned in the policy document, upon the receipt of all the premiums due and other charges, as per the terms and conditions of the policy.
Q13.
What is the revival period?

a.

The period during which policyholders can make partial withdrawals

b.

The period during which the insurer can revise the terms of the policy

c.

The period during which the policyholder is entitled to revive a discontinued policy

d.

The period during which policyholders can switch to a different policy

Discuss
Answer: (c).The period during which the policyholder is entitled to revive a discontinued policy Explanation:Revival Period refers to the period of two consecutive years from the date of discontinuance of the policy, during which the policyholder is entitled to revive the policy which was discontinued due to the non-payment of premium.
Q14.
What are single 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 premium paid by a single payment at the inception of the policy

Discuss
Answer: (d).Products with premium paid by a single payment at the inception of the policy Explanation:Single premium products refer to non-linked insurance products where the premium payment is made by a single payment at the inception of the policy.
Q15.
What is the Sum Assured on death?

a.

The amount payable upon maturity of the policy

b.

The absolute amount of benefit guaranteed to be paid upon death of the life assured

c.

The amount of premium paid by the policyholder

d.

The total value of assets held by the insurer

Discuss
Answer: (b).The absolute amount of benefit guaranteed to be paid upon death of the life assured Explanation:Sum Assured on death refers to an absolute amount of benefit which is guaranteed to become payable on the death of the life assured, in accordance with the terms and conditions of the policy.
Q16.
What is Sum Assured on maturity?

a.

The absolute amount of benefit payable on death of the life assured

b.

The amount payable upon discontinuance of the policy

c.

The amount guaranteed to be paid upon maturity of the policy

d.

The amount paid by the insurer upon surrender of the policy

Discuss
Answer: (c).The amount guaranteed to be paid upon maturity of the policy Explanation:Sum Assured on maturity refers to an absolute amount of benefit which is guaranteed to become payable on maturity of the policy in accordance with the terms and conditions of the policy.
Q17.
What does surrender mean?

a.

A change in the investment pattern of the policyholder

b.

Complete withdrawal or termination of the entire policy

c.

A facility allowing policyholders to switch between segregated funds

d.

The entitlement to revive a discontinued policy

Discuss
Answer: (b).Complete withdrawal or termination of the entire policy Explanation:Surrender refers to the complete withdrawal or termination of the entire policy.
Q18.
What is Surrender Value?

a.

The premium amount refunded to the policyholder upon cancellation

b.

The amount payable in case of policy discontinuance according to policy terms

c.

The benefit payable on maturity of the policy

d.

The benefit payable upon death of the life assured

Discuss
Answer: (b).The amount payable in case of policy discontinuance according to policy terms Explanation:Surrender Value refers to an amount, if any, that becomes payable in case of surrender in accordance with the terms and conditions of the policy.
Q19.
What are switches in insurance?

a.

Facility allowing policyholders to change the investment pattern

b.

A mechanism for policy reinstatement

c.

The process of transferring policy ownership

d.

An option to convert term life insurance into whole life insurance

Discuss
Answer: (a).Facility allowing policyholders to change the investment pattern Explanation:Switches refer to a facility allowing the policyholder to change the investment pattern by moving from one segregated fund to other segregated fund(s) among those offered under the underlying unit-linked product of the insurer.
Q20.
What are Non-linked or linked Whole Life products?

a.

Products with definite policy terms terminated upon death of the life assured

b.

Products offering a guaranteed sum on maturity of the policy

c.

Products with no fixed policy term terminating only upon death of the life assured

d.

Products linked to market indices providing flexible investment options

Discuss
Answer: (c).Products with no fixed policy term terminating only upon death of the life assured Explanation:Non-linked or linked Whole Life products refer to insurance products without a definite policy term, terminating only upon the death of the life assured.
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