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 3 of 7

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Q21.
How does the type of product influence withdrawal rates?

a.

Term insurance plans are expected to have higher withdrawal rates due to low awareness

b.

Introduction of competitive term insurance plans is expected to decrease withdrawal rates

c.

Unit linked products typically have higher withdrawal rates in the initial years

d.

Conventional products have lower withdrawal rates compared to unit linked products

Discuss
Answer: (c).Unit linked products typically have higher withdrawal rates in the initial years Explanation:Unit linked products typically have higher withdrawal rates in the initial years compared to conventional products, as they are often purchased by financially knowledgeable individuals.
Q22.
How does past experience influence withdrawal rates?

a.

Insurer's past experience has no impact on withdrawal rates

b.

Industry experience reflects general mood of policyholders regarding insurance policies

c.

Past trends have little relevance to future withdrawal rates

d.

Industry experience does not reflect policyholders' attitudes towards insurance policies

Discuss
Answer: (b).Industry experience reflects general mood of policyholders regarding insurance policies Explanation:Insurer's past experience and industry experience are major factors influencing withdrawal rates, as they reflect the general mood of policyholders regarding insurance policies.
Q23.
How does premium frequency affect withdrawal rates?

a.

Single premium contracts have higher withdrawal rates compared to regular premium plans

b.

Regular premium plans offer more opportunities for withdrawal compared to monthly premiums

c.

Withdrawal rates are not affected by the frequency of premium payments

d.

Single premium contracts typically have lower withdrawal rates compared to regular premium plans

Discuss
Answer: (d).Single premium contracts typically have lower withdrawal rates compared to regular premium plans Explanation:Single premium contracts are expected to have lower withdrawal rates compared to regular premium plans, as there are fewer opportunities for withdrawal.
Q24.
How does the general economic situation impact withdrawal rates?

a.

Economic deterioration is likely to decrease withdrawal rates for all contract types

b.

Economic conditions have no effect on withdrawal rates

c.

Deterioration in economic conditions may increase withdrawal rates, depending on the contract type

d.

Economic stability always leads to higher withdrawal rates

Discuss
Answer: (c).Deterioration in economic conditions may increase withdrawal rates, depending on the contract type Explanation:Deterioration in economic conditions may increase withdrawal rates, but the impact depends on the type of contract.
Q25.
In the scenario of economic deterioration, how does regular premium term insurance typically fare?

a.

Discontinuance rates increase due to high premiums relative to income

b.

Discontinuance rates remain unaffected due to low premiums and lack of surrender value

c.

Surrender rates decrease due to low premiums and high surrender value

d.

Discontinuance rates decrease due to low premiums and high surrender value

Discuss
Answer: (b).Discontinuance rates remain unaffected due to low premiums and lack of surrender value Explanation:Regular premium term insurance policies typically fare well in economic downturns as discontinuance rates remain unaffected due to low premiums and lack of surrender value.
Q26.
How does economic deterioration impact single premium savings policies?

a.

Discontinuance rates decrease due to absence of premiums

b.

Surrender rates decrease due to absence of premiums

c.

Discontinuance rates increase due to high premiums and low surrender value

d.

Surrender rates increase due to high premiums and high surrender value

Discuss
Answer: (d).Surrender rates increase due to high premiums and high surrender value Explanation:Economic deterioration typically leads to an increase in surrender rates for single premium savings policies due to the presence of high surrender value.
Q27.
What effect does economic downturn have on regular premium endowment assurance policies?

a.

Discontinuance rates decrease due to low premiums and high surrender value

b.

Discontinuance rates increase due to low premiums and high surrender value

c.

Surrender rates decrease due to low premiums and high surrender value

d.

Surrender rates increase due to high premiums relative to income

Discuss
Answer: (b).Discontinuance rates increase due to low premiums and high surrender value Explanation:Economic downturns often lead to a significant increase in discontinuance rates for regular premium endowment assurance policies due to the inability of policyholders to pay high premiums relative to their incomes and the availability of significant surrender values.
Q28.
How does the initiation of sales impact withdrawal rates?

a.

Withdrawal rates are lower if clients initiate the sales themselves

b.

Withdrawal rates are higher if clients initiate the sales themselves

c.

Withdrawal rates remain unaffected by the initiation of sales

d.

Withdrawal rates are higher if sales are initiated by the insurer

Discuss
Answer: (a).Withdrawal rates are lower if clients initiate the sales themselves Explanation:Withdrawal rates are typically lower when clients themselves initiate the sales process, indicating a higher level of commitment to the policy.
Q29.
Which factor is likely to result in higher withdrawal rates?

a.

Need-based selling

b.

Sales initiated by the client

c.

Sales pressure exerted by the insurer

d.

Policies sold with proper information gathering

Discuss
Answer: (c).Sales pressure exerted by the insurer Explanation:Higher withdrawal rates are typically associated with sales practices involving more sales pressure exerted by the insurer, which may lead to clients purchasing policies they do not truly need.
Q30.
How does the target market affect withdrawal rates?

a.

Higher withdrawal rates are expected in affluent target markets

b.

Lower withdrawal rates are expected in affluent target markets

c.

Target market has no impact on withdrawal rates

d.

Withdrawal rates are higher in urban areas compared to rural areas

Discuss
Answer: (b).Lower withdrawal rates are expected in affluent target markets Explanation:Lower withdrawal rates are expected in affluent target markets where policyholders are less likely to face economic hardships necessitating policy withdrawals.
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