Premium Bases Mortality And Morbidity Rates MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Premium Bases Mortality And Morbidity 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 Mortality And Morbidity Rates MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Premium Bases Mortality And Morbidity Rates MCQs | Page 9 of 10

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Q81.
What is the primary purpose of underwriting in the context of life insurance?

a.

Assessing mortality and morbidity risks

b.

Setting the appropriate premium and terms of cover

c.

Determining financial stability of the insurer

d.

Evaluating investment opportunities

Discuss
Answer: (b).Setting the appropriate premium and terms of cover Explanation:The primary purpose of underwriting in the context of life insurance is to assess the risk, determine whether it is acceptable, and set the appropriate premium and terms of cover.
Q82.
What are the two main types of underwriting in life insurance?

a.

Actuarial underwriting and statistical underwriting

b.

Financial underwriting and investment underwriting

c.

Medical underwriting and financial underwriting

d.

Risk underwriting and market underwriting

Discuss
Answer: (c).Medical underwriting and financial underwriting Explanation:The two main types of underwriting in life insurance are medical underwriting, which screens prospective policyholders for health issues, and financial underwriting, which ensures the policyholder's financial ability to afford the policy and detects fraud.
Q83.
How does reinsurance help insurers manage risk?

a.

By transferring mortality and morbidity risk to another party

b.

By investing in diverse portfolios

c.

By minimizing administrative costs

d.

By increasing policyholder premiums

Discuss
Answer: (a).By transferring mortality and morbidity risk to another party Explanation:Reinsurance helps insurers manage risk by transferring a portion of the mortality or morbidity risk to another party, known as the reinsurer.
Q84.
What risk is associated with reinsurance arrangements?

a.

Market risk

b.

Credit risk

c.

Operational risk

d.

Liquidity risk

Discuss
Answer: (b).Credit risk Explanation:The risk associated with reinsurance arrangements is credit risk, which refers to the risk of default or non-timely payment by the reinsurer.
Q85.
How does underwriting policy influence mortality or morbidity assumptions in pricing?

a.

It has no influence on assumptions

b.

It ensures consistency between underwriting and assumptions

c.

It increases the complexity of assumptions

d.

It reduces the need for assumptions

Discuss
Answer: (b).It ensures consistency between underwriting and assumptions Explanation:Underwriting policy influences mortality or morbidity assumptions in pricing by ensuring consistency between the risks accepted through underwriting and the assumptions used for pricing.
Q86.
What is the primary purpose of mortality and morbidity rates in insurance?

a.

Premium amounts can be determined using the mortality and morbidity rates

b.

Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

c.

Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time.

d.

Most important factors which are important in choosing a rate are mortality or morbidity risk, target market, underwriting, liability profile and past experience.

Discuss
Answer: (a).Premium amounts can be determined using the mortality and morbidity rates Explanation:Mortality and morbidity rates are used in insurance to determine premium amounts based on the expected number of claims, reflecting the mortality or morbidity risk associated with the insured population.
Q87.
How is mortality rate defined?

a.

Premium amounts can be determined using the mortality and morbidity rates

b.

Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

c.

Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time.

d.

Most important factors which are important in choosing a rate are mortality or morbidity risk, target market, underwriting, liability profile and past experience.

Discuss
Answer: (b).Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time. Explanation:Mortality rate measures the number of deaths in a population over a specific period, relative to the size of that population, providing insights into mortality risk for insurance purposes.
Q88.
What does morbidity rate refer to?

a.

Premium amounts can be determined using the mortality and morbidity rates

b.

Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

c.

Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time.

d.

Most important factors which are important in choosing a rate are mortality or morbidity risk, target market, underwriting, liability profile and past experience.

Discuss
Answer: (c).Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time. Explanation:Morbidity rate indicates the prevalence of poor health or newly occurring cases of a disease within a population during a specified time frame, providing insights into morbidity risk for insurance purposes.
Q89.
What are the key factors considered in choosing mortality or morbidity rates?

a.

Premium amounts can be determined using the mortality and morbidity rates

b.

Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

c.

Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time.

d.

Most important factors which are important in choosing a rate are mortality or morbidity risk, target market, underwriting, liability profile and past experience.

Discuss
Answer: (d).Most important factors which are important in choosing a rate are mortality or morbidity risk, target market, underwriting, liability profile and past experience. Explanation:Key factors in choosing mortality or morbidity rates include assessing mortality or morbidity risk, understanding the target market, considering underwriting practices, evaluating liability profiles, and analyzing past experience.
Q90.
What is the significance of adjusting standard table rates in insurance?

a.

Premium amounts can be determined using the mortality and morbidity rates

b.

Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a population, scaled to the size of that population, per unit of time.

c.

Morbidity rate refers to the number of individuals in poor health during a given time period (the prevalence rate) or the number of newly appearing cases of the disease per unit of time.

d.

Company adjusts standard table rates depending upon its own experience and its own estimation of future conditions.

Discuss
Answer: (d).Company adjusts standard table rates depending upon its own experience and its own estimation of future conditions. Explanation:Insurance companies adjust standard table rates based on their own experience and future estimations to reflect the specific risk profiles and conditions relevant to their insured population.
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