Premium Bases Expense Rates MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Premium Bases Expense Rates, 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 Premium Bases Expense Rates 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 Premium Bases Expense Rates mcq questions that explore various aspects of Premium Bases Expense Rates problems. Each MCQ is crafted to challenge your understanding of Premium Bases Expense Rates 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 Premium Bases Expense Rates MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Premium Bases Expense Rates MCQs | Page 2 of 9

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q11.
What makes distinguishing between marginal and fixed overheads subjective in insurance?

a.

Variable nature of expenses

b.

Complexity of policy structures

c.

Subjectivity in property valuation

d.

Uncertainty in expense estimation

Discuss
Answer: (c).Subjectivity in property valuation Explanation:Distinguishing between marginal and fixed overheads in insurance can be subjective, particularly regarding property costs, as they can be considered part of marginal initial administration expenses or overall fixed expenses.
Q12.
When are variable expenses typically incurred in insurance?

a.

Throughout the term of the policy

b.

At the point of policy sales

c.

At policy maturity

d.

At policy termination

Discuss
Answer: (b).At the point of policy sales Explanation:Variable expenses in insurance are typically incurred at the point of policy sales, representing additional expenses associated with each new policy sold.
Q13.
What are initial expenses in insurance also known as?

a.

Variable expenses

b.

Renewal expenses

c.

Acquisition expenses

d.

Termination expenses

Discuss
Answer: (c).Acquisition expenses Explanation:Initial expenses in insurance, incurred at the outset or point of sales, are also known as acquisition expenses.
Q14.
When are renewal expenses incurred in insurance?

a.

At policy maturity

b.

Throughout the term of the policy

c.

At policy termination

d.

At the point of policy sales

Discuss
Answer: (b).Throughout the term of the policy Explanation:Renewal expenses in insurance are incurred throughout the term of the policy and are also known as maintenance expenses.
Q15.
When are termination expenses incurred in insurance?

a.

At policy maturity

b.

Throughout the term of the policy

c.

At the point of policy sales

d.

At policy renewal

Discuss
Answer: (a).At policy maturity Explanation:Termination expenses in insurance are incurred when the policy matures or is surrendered, representing the end-of-contract expenses.
Q16.
How is the expense rate typically measured in insurance business?

a.

By the total premium collected

b.

As a proportion of the sum assured

c.

Based on the number of claims processed

d.

As a fixed amount per policy

Discuss
Answer: (b).As a proportion of the sum assured Explanation:The expense rate in insurance business is usually measured as a proportion of the sum assured, representing the amount of money spent in transacting insurance business for a certain unit of time.
Q17.
Which expense assumption is typically represented as a percentage of the premium?

a.

Initial fixed expenses

b.

Initial variable expenses

c.

Renewal variable expenses

d.

Investment expenses

Discuss
Answer: (b).Initial variable expenses Explanation:Initial variable expenses in insurance, such as incentives for sales staff, are typically represented as a percentage of the premium.
Q18.
What is the primary driver of stamp duty expense in insurance?

a.

Number of new policies

b.

Inforce premium

c.

Sum assured

d.

Investment fund

Discuss
Answer: (c).Sum assured Explanation:Stamp duty expense in insurance is primarily driven by the sum assured and is represented as a percentage of the sum assured.
Q19.
Which type of expense is typically represented as an amount per policy?

a.

Initial sum assured based expenses

b.

Renewal fixed expenses

c.

Termination fixed expenses

d.

Termination sum assured based expenses

Discuss
Answer: (c).Termination fixed expenses Explanation:Termination fixed expenses in insurance, such as salary of claim department, are typically represented as an amount per policy.
Q20.
Which expense assumption is typically represented as a percentage of the investment fund?

a.

Initial fixed expenses

b.

Renewal variable expenses

c.

Investment expenses

d.

Termination sum assured based expenses

Discuss
Answer: (c).Investment expenses Explanation:Investment expenses in insurance, such as brokerage and custodian charges, are typically represented as a percentage of the total investment fund.
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