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.

In this section, you'll find a wide range of Important Terms and Definitions mcq questions that explore various aspects of Important Terms and Definitions problems. Each MCQ is crafted to challenge your understanding of Important Terms and Definitions 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 Important Terms and Definitions MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Important Terms and Definitions. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Important Terms and Definitions knowledge to the test? Let's get started with our carefully curated MCQs!

Important Terms and Definitions MCQs | Page 5 of 6

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q41.
How is insurance defined?

a.

The process of mitigating risk through diversification of investments

b.

A social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large number of similar exposures

c.

The act of providing financial assistance to individuals during difficult times

d.

A mechanism for guaranteeing profit in the event of a loss

Discuss
Answer: (b).A social device for minimizing risk of uncertainty regarding loss by spreading the risk over a large number of similar exposures Explanation:Insurance is defined as a social device for minimizing the risk of uncertainty regarding loss by spreading the risk over a large enough number of similar exposures to predict the individual chance of loss.
Q42.
Who is the "Insured" in insurance terminology?

a.

The insurance agent selling the policy

b.

The beneficiary named in the policy

c.

The person whose life is covered by the insurance policy

d.

The insurance company providing coverage

Discuss
Answer: (c).The person whose life is covered by the insurance policy Explanation:The "Insured" is the person whose life is covered by a policy of insurance, meaning they are the one protected by the policy's coverage.
Q43.
What does a Keyman Insurance Policy typically cover?

a.

Property damage caused by employees

b.

Losses due to natural disasters

c.

The life of a key person who is or was an employee/connected to a business

d.

Health benefits for company executives

Discuss
Answer: (c).The life of a key person who is or was an employee/connected to a business Explanation:A Keyman Insurance Policy covers the life of a key person who is or was an employee/connected to a business, providing financial protection to the business in the event of the key person's death.
Q44.
What is a "Lapsed Policy"?

a.

A policy that has been surrendered voluntarily by the policyholder

b.

A policy terminated due to non-payment of the premium

c.

A policy with reduced coverage due to a change in the insured's health

d.

A policy that has reached its maturity date

Discuss
Answer: (b).A policy terminated due to non-payment of the premium Explanation:A "Lapsed Policy" is a policy that has terminated and is no longer in force due to non-payment of the due premium by the policyholder.
Q45.
Who is referred to as the "Life Assured" in an individual life insurance policy?

a.

The beneficiary named in the policy

b.

The person who purchases the policy

c.

The insurance agent selling the policy

d.

The person whose life is insured by the policy

Discuss
Answer: (d).The person whose life is insured by the policy Explanation:The "Life Assured" is the person whose life is insured by an individual life insurance policy, meaning they are the individual covered by the policy's life insurance benefits.
Q46.
What does "Maturity" refer to in the context of a life insurance policy?

a.

The date when the premium payment is due

b.

The date when the policyholder can surrender the policy for a cash value

c.

The date upon which the death benefit is paid to the beneficiary

d.

The date upon which the face amount of the policy is paid if the insured is still alive

Discuss
Answer: (d).The date upon which the face amount of the policy is paid if the insured is still alive Explanation:"Maturity" in a life insurance policy context refers to the date upon which the face amount of the policy is paid to the policyholder if the insured is still alive at that time.
Q47.
What is meant by a "Maturity Claim"?

a.

The claim made by the beneficiary upon the death of the insured

b.

The claim for partial withdrawals during the policy term

c.

The payment to the policyholder at the end of the stipulated term of the policy

d.

The claim for additional benefits added to the policy through riders

Discuss
Answer: (c).The payment to the policyholder at the end of the stipulated term of the policy Explanation:A "Maturity Claim" refers to the payment made to the policyholder at the end of the stipulated term of the policy, typically when the policy matures.
Q48.
What is "Misrepresentation" in the context of insurance?

a.

The intentional act of concealing information from the insurance company

b.

The act of providing false information to the insurance company

c.

The act of changing policy terms without informing the policyholder

d.

The act of not disclosing relevant information to the insurance company

Discuss
Answer: (b).The act of providing false information to the insurance company Explanation:"Misrepresentation" refers to the act of making, issuing, circulating, or causing to be issued or circulated an estimate, illustration, circular, or statement that does not accurately represent the correct policy terms, dividends, share of surplus, or the nature of the policy.
Q49.
What distinguishes a "Money Back Policy" from endowment plans?

a.

Money back policies offer periodic "survivance payments" during the policy term

b.

Money back policies have higher premium rates compared to endowment plans

c.

Money back policies do not offer a death benefit

d.

Money back policies do not provide a lump sum amount upon maturity

Discuss
Answer: (a).Money back policies offer periodic "survivance payments" during the policy term Explanation:A "Money Back Policy" differs from endowment plans in that it offers periodic "survivance payments" during the policy term, along with a lump sum amount upon surviving the policy's term, while endowment plans typically do not offer periodic payments during the term.
Q50.
What is "Moral Hazard" in insurance?

a.

The risk associated with natural disasters

b.

The potential for fraud within insurance companies

c.

The risk factors that affect the decision of the insured person to accept a policy

d.

A situation where one party engages in risky behavior knowing they are protected against the risk, leading to costs for the other party

Discuss
Answer: (d).A situation where one party engages in risky behavior knowing they are protected against the risk, leading to costs for the other party Explanation:Moral hazard in insurance refers to a situation where one party engages in risky behavior knowing that they are protected against the risk, while the cost of that risk is borne by the other party, often the insurer.
Page 5 of 6