Premium Bases Persistency Rates MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Premium Bases Persistency 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 Persistency 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 Persistency Rates mcq questions that explore various aspects of Premium Bases Persistency Rates problems. Each MCQ is crafted to challenge your understanding of Premium Bases Persistency 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 Persistency 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 Persistency Rates MCQs | Page 2 of 7

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Q11.
What does withdrawal rate refer to in insurance?

a.

The probability of a policyholder paying the premium

b.

The probability of a policy reaching maturity

c.

The probability of a policyholder withdrawing from the policy before maturity

d.

The probability of a policyholder receiving the surrender value

Discuss
Answer: (c).The probability of a policyholder withdrawing from the policy before maturity Explanation:Withdrawal rate in insurance refers to the probability that a policyholder withdraws from the policy fully or partially before the maturity date.
Q12.
When are surrender rates applicable in insurance policies?

a.

Only during the initial years of the policy

b.

After the maturity date of the policy

c.

At any specific month during the policy term

d.

For the full year rather than at any specific month

Discuss
Answer: (d).For the full year rather than at any specific month Explanation:Surrender rates in insurance policies are applicable for the full year rather than at any specific month, especially after the initial years of the policy.
Q13.
What is the main factor influencing withdrawal rates?

a.

Premium frequency

b.

Distribution channel

c.

Withdrawal risk

d.

Financial knowledge of the client

Discuss
Answer: (c).Withdrawal risk Explanation:The main factor influencing withdrawal rates in insurance is the withdrawal risk, which refers to the risk of more or less withdrawal than assumed and its impact on profit.
Q14.
Which of the following is NOT a factor considered in choosing withdrawal rates?

a.

Type of product

b.

Competitive situation of the product

c.

Size of premium

d.

Surrender value at maturity

Discuss
Answer: (d).Surrender value at maturity Explanation:Surrender value at maturity is not a factor considered in choosing withdrawal rates in insurance.
Q15.
How are withdrawal rates assumed for modeling purposes?

a.

A small portion surrenders every month without any seasonality effect

b.

No surrender is allowed until the policy matures

c.

A small portion surrenders every month with seasonality effect for any higher surrender in a particular month

d.

Withdrawals are assumed only after the premium frequency ends

Discuss
Answer: (c).A small portion surrenders every month with seasonality effect for any higher surrender in a particular month Explanation:Withdrawal rates assumed for modeling purposes involve a small portion surrendering every month with a seasonality effect for any higher surrender in a particular month, especially when the premium is due.
Q16.
How does an actuary determine the best estimate rate of withdrawal?

a.

By choosing an optimistic estimate

b.

By choosing a pessimistic estimate

c.

By being conservative in choosing the withdrawal rate

d.

By analyzing past experience and estimating future conditions

Discuss
Answer: (d).By analyzing past experience and estimating future conditions Explanation:An actuary determines the best estimate rate of withdrawal by analyzing past experience and estimating future conditions.
Q17.
What factors impact the withdrawal rates in insurance?

a.

Only the company's recent experience

b.

Past experience and industry-wide experience

c.

Future conditions unrelated to past experience

d.

Target market and distribution channel

Discuss
Answer: (b).Past experience and industry-wide experience Explanation:Factors impacting withdrawal rates in insurance include both past experience and industry-wide experience, along with factors such as future conditions, target market, and distribution channel.
Q18.
When analyzing withdrawal rates, what is considered if the company lacks adequate data?

a.

Only the experience under similar contracts

b.

Only the industry-wide experience

c.

Only the future conditions

d.

Any available data, including experience under similar contracts or industry-wide experience

Discuss
Answer: (d).Any available data, including experience under similar contracts or industry-wide experience Explanation:When analyzing withdrawal rates and lacking adequate company data, any available data including experience under similar contracts or industry-wide experience may be considered.
Q19.
What may necessitate adjustments to withdrawal rates?

a.

A change in the insurer's financial objectives

b.

A change in the company's distribution channel

c.

A change in the benefits offered or target market

d.

A change in the company's withdrawal policies

Discuss
Answer: (c).A change in the benefits offered or target market Explanation:Adjustments to withdrawal rates may be necessary due to a change in the benefits being offered or target market, along with other factors like distribution channels.
Q20.
What is the aim when determining withdrawal rates?

a.

To maximize shareholder profits

b.

To minimize policyholder benefits

c.

To meet the shareholders' objective while being conservative

d.

To ensure the policy remains in force without lapsing

Discuss
Answer: (c).To meet the shareholders' objective while being conservative Explanation:The aim when determining withdrawal rates is to meet the shareholders' objective while being conservative in the estimation process.
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