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 4 of 9

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Q31.
What is one of the major factors considered in expense assumption?

a.

Market trends

b.

Type of product

c.

Regulatory requirements

d.

Economic conditions

Discuss
Answer: (b).Type of product Explanation:One of the major factors considered in expense assumption is the type of product being offered. Different types of products may incur varying amounts of expenses.
Q32.
How does the nature and type of products influence expense assumption?

a.

It has no impact on expense assumption

b.

It determines the level of medical underwriting cost

c.

It affects the number of agents and branch productivity

d.

It determines the persistency assumption

Discuss
Answer: (b).It determines the level of medical underwriting cost Explanation:The nature and type of products influence expense assumption by determining factors such as the level of medical underwriting cost, which can vary depending on the type of product being offered.
Q33.
What factors are considered in estimating expense assumption related to sales through distribution channels?

a.

Regulatory restrictions

b.

Economic conditions

c.

Volume of sales and persistency assumption

d.

Competition and industry practice

Discuss
Answer: (c).Volume of sales and persistency assumption Explanation:Estimating expense assumption related to sales through distribution channels involves considering factors such as the volume of sales and persistency assumption, which are crucial for determining per-policy expense assumptions.
Q34.
How does the extent of expense risk impact profit?

a.

It has no impact on profit

b.

It can have a minor impact on profit

c.

It significantly impacts profit

d.

It depends on the product design

Discuss
Answer: (d).It depends on the product design Explanation:The extent of expense risk can impact profit, with the degree of impact depending on the product design. For example, in products where the expense loading is a small portion of the overall premium, divergence from expected expenses may have a minor impact on profit.
Q35.
What technique is used for studying new product launches, new distribution channels, and new life insurance companies?

a.

Historical analysis

b.

Industry averages comparison

c.

Subjective analysis

d.

Complex expense models

Discuss
Answer: (c).Subjective analysis Explanation:Variations of subjective analysis techniques are used for studying new product launches, new distribution channels, and new life insurance companies. These analyses are usually subjective and dependent on the circumstances of each company.
Q36.
How does a company's recent experience contribute to determining expense assumptions?

a.

It has no impact on expense assumptions

b.

It provides insight into different types of expenses incurred

c.

It determines the regulatory restrictions on expenditure

d.

It influences the choice of distribution channels

Discuss
Answer: (b).It provides insight into different types of expenses incurred Explanation:A company's recent experience helps in determining expense assumptions by providing insight into the different types of expenses incurred for the type of business concerned.
Q37.
Why is infrastructure considered a major input for expense modeling?

a.

It determines the persistency assumption

b.

It helps in estimating the total expenses incurred in the future

c.

It influences the choice of distribution channels

d.

It has no impact on expense assumptions

Discuss
Answer: (b).It helps in estimating the total expenses incurred in the future Explanation:Infrastructure is considered a major input for expense modeling because it helps in estimating the total expenses that will be incurred in the future.
Q38.
How does insurance legislation affect expense estimation?

a.

It determines the recent experience of the company

b.

It provides support from consultants

c.

It imposes a ceiling on expenditure

d.

It influences the choice of distribution channels

Discuss
Answer: (c).It imposes a ceiling on expenditure Explanation:Insurance legislation imposes a ceiling on expenditure, which should be considered while estimating overall expenses.
Q39.
In what way can consultants support expense estimation?

a.

By providing insight into different types of expenses

b.

By determining the recent experience of the company

c.

By influencing the choice of distribution channels

d.

By providing support from reinsurers

Discuss
Answer: (a).By providing insight into different types of expenses Explanation:Consultants can support expense estimation by providing insight into different types of expenses, especially when the company has less experience in building expense models.
Q40.
How can data from reinsurers be beneficial for expense assumption?

a.

By determining the recent experience of the company

b.

By providing support from consultants

c.

By influencing the choice of distribution channels

d.

By providing insight into expense assumptions

Discuss
Answer: (d).By providing insight into expense assumptions Explanation:Data from reinsurers can be beneficial for expense assumption by providing insight into expense assumptions, especially when recent experience is not available or not sufficient.
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