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 6 of 6

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Q51.
What is "Nomination" in the context of insurance?

a.

The process of assigning beneficiaries to a life insurance policy

b.

An act authorizing another person to receive the policy money

c.

The selection of the type of insurance policy

d.

The procedure for canceling an insurance policy

Discuss
Answer: (b).An act authorizing another person to receive the policy money Explanation:"Nomination" in insurance refers to an act by which the policyholder authorizes another person, known as the nominee, to receive the policy money in the event of the policyholder's death.
Q52.
What are "Non-cancelable policies"?

a.

Policies that can be terminated at any time by the insurer

b.

Policies that cannot be changed or altered once issued

c.

Policies that remain in effect regardless of changes in circumstances, as long as premiums are paid

d.

Policies that are automatically renewed each year without requiring the policyholder's consent

Discuss
Answer: (c).Policies that remain in effect regardless of changes in circumstances, as long as premiums are paid Explanation:"Non-cancelable policies" are insurance policies that remain in effect regardless of changes in circumstances, as long as the premiums are paid regularly and on time. These policies typically cannot be canceled by the insurer.
Q53.
What is a "Premium" in insurance?

a.

The bonus paid by the insurer to the policyholder

b.

The penalty charged for late payment of premiums

c.

The amount paid by the policyholder to the insurer in exchange for insurance coverage

d.

The additional fee for adding optional benefits to a policy

Discuss
Answer: (c).The amount paid by the policyholder to the insurer in exchange for insurance coverage Explanation:In insurance, a "Premium" refers to the payment made by the policyholder to the insurer in exchange for the insurer's obligation to pay benefits upon the occurrence of the contractually-specified contingency, such as death or disability.
Q54.
What do Premium Back Term Insurance Plans provide?

a.

Refund of a portion of the premiums paid upon policy maturity

b.

Refund of all the premiums paid if the life assured dies during the policy term

c.

Partial refund of premiums if the policyholder surrenders the policy

d.

Refund of all the premiums paid if the life assured survives to the end of the policy term

Discuss
Answer: (d).Refund of all the premiums paid if the life assured survives to the end of the policy term Explanation:Premium Back Term Insurance Plans offer a refund of all the premiums paid if the life assured survives to the end of the policy term. In case of the death of the life assured during the policy term, the total sum assured is paid to the beneficiaries.
Q55.
Who is considered a "Sub Standard Risk" in insurance?

a.

A person with a high net worth

b.

A person with a low risk of illness or injury

c.

A person with an above-average health condition and lifestyle

d.

A person considered an under-average or impaired insurance risk due to various factors

Discuss
Answer: (d).A person considered an under-average or impaired insurance risk due to various factors Explanation:A "Sub Standard Risk" in insurance refers to a person who is considered an under-average or impaired insurance risk due to various factors such as physical condition, family or personal history of disease, occupation, residence in unhealthy climate, or dangerous habits.
Q56.
What does "Vesting Age" signify in an insurance-cum-pension plan?

a.

The age at which the policyholder becomes eligible to receive pension payments

b.

The age at which the policyholder can surrender the policy for a cash value

c.

The age at which the policyholder can convert the policy into an endowment policy

d.

The age at which the policyholder's beneficiaries become eligible for death benefits

Discuss
Answer: (a).The age at which the policyholder becomes eligible to receive pension payments Explanation:"Vesting Age" in an insurance-cum-pension plan refers to the age at which the policyholder becomes eligible to start receiving pension payments from the plan.
Q57.
What is a "With-Profit policy" in life insurance?

a.

A policy where the policyholder receives a share of the company's profits in the form of bonuses

b.

A policy where the premiums are invested in risky assets for potentially higher returns

c.

A policy where the premiums are guaranteed to be returned with interest at maturity

d.

A policy where the premiums are lower compared to non-participating policies

Discuss
Answer: (a).A policy where the policyholder receives a share of the company's profits in the form of bonuses Explanation:A "With-Profit policy" is a life insurance policy where the policyholder participates in the profits of the insurance company, receiving bonuses based on the company's performance.
Q58.
What is a "Without-Profit policy" in life insurance?

a.

A policy where the premiums are invested in non-risky assets for stable returns

b.

A policy where the policyholder receives a share of the company's profits in the form of bonuses

c.

A policy where no bonuses are paid to the policyholders, and premiums are not invested in company profits

d.

A policy where the premiums are paid in a lump sum at the beginning of the policy term

Discuss
Answer: (c).A policy where no bonuses are paid to the policyholders, and premiums are not invested in company profits Explanation:A "Without-Profit policy" is a non-participating life insurance policy where the policyholder does not receive a share of the company's profits or surplus, and no bonuses are paid. These policies typically include term insurance or health insurance policies.
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