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 4 of 7

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Q31.
What role does financial knowledge play in withdrawal rates?

a.

Higher financial knowledge leads to higher withdrawal rates

b.

Lower financial knowledge leads to lower withdrawal rates

c.

Financial knowledge has no impact on withdrawal rates

d.

Higher financial knowledge leads to lower withdrawal rates

Discuss
Answer: (d).Higher financial knowledge leads to lower withdrawal rates Explanation:Higher levels of financial knowledge among policyholders tend to lead to lower withdrawal rates as individuals better understand the value and benefits of their insurance policies.
Q32.
How does rural vs. urban residence affect withdrawal rates?

a.

Withdrawal rates are higher in urban areas due to higher affluence

b.

Withdrawal rates are higher in rural areas due to lower affluence

c.

Withdrawal rates are lower in urban areas due to higher financial knowledge

d.

Withdrawal rates are lower in rural areas due to lower financial knowledge

Discuss
Answer: (b).Withdrawal rates are higher in rural areas due to lower affluence Explanation:Withdrawal rates are typically higher in rural areas compared to urban areas due to lower affluence and economic prosperity, which may necessitate policy withdrawals for financial reasons.
Q33.
How does the sales initiation impact withdrawal rates?

a.

Withdrawal rates are lower if clients themselves initiate the sales

b.

Withdrawal rates are higher if clients themselves initiate the sales

c.

Withdrawal rates are lower if sales are initiated by agents

d.

Withdrawal rates are higher if sales are initiated by agents

Discuss
Answer: (a).Withdrawal rates are lower if clients themselves initiate the sales Explanation:Withdrawal rates are typically lower if clients themselves initiate the sales, as they are more likely to understand their own needs and make informed decisions.
Q34.
What effect does the availability of different premium payment modes have on withdrawal rates?

a.

ECS system reduces withdrawal rates due to its convenience

b.

Cash payments reduce withdrawal rates due to their traceability

c.

ECS system increases withdrawal rates due to its complexity

d.

Cash payments increase withdrawal rates due to their convenience

Discuss
Answer: (a).ECS system reduces withdrawal rates due to its convenience Explanation:ECS system, where premiums are automatically deducted from clients' bank accounts, tends to reduce withdrawal rates due to its convenience compared to other payment modes.
Q35.
How does the competitive situation of the product affect withdrawal rates?

a.

Introduction of more attractive products increases withdrawal rates of existing products

b.

Introduction of more attractive products decreases withdrawal rates of existing products

c.

Introduction of more attractive products has no impact on withdrawal rates

d.

Introduction of more attractive products reduces the need for withdrawals

Discuss
Answer: (a).Introduction of more attractive products increases withdrawal rates of existing products Explanation:The introduction of more attractive products can have an adverse effect on the withdrawal rates of existing products, as policyholders may be tempted to switch to the newer, more appealing options.
Q36.
What is the first step in deriving assumptions for withdrawal rates?

a.

Calculation of persistency rates

b.

Grouping of data

c.

Collection of data

d.

Calculation of withdrawal rates

Discuss
Answer: (c).Collection of data Explanation:The first step in deriving assumptions for withdrawal rates is the collection of data from various sources within the company.
Q37.
Why is the time period for data collection important in withdrawal experience analysis?

a.

To ensure the data is large enough to be statistically significant

b.

To avoid abnormal influences on the data

c.

To allow for quick reactions to recent changes in withdrawal levels

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The time period for data collection is important to ensure the data is statistically significant, to avoid abnormal influences, and to allow for quick reactions to recent changes in withdrawal levels.
Q38.
What is the recommended time frame for persistency analysis?

a.

Last 3-4 years

b.

Last 1-2 years

c.

Last 5-6 years

d.

Last 6-12 months

Discuss
Answer: (b).Last 1-2 years Explanation:For persistency analysis, it is usually considered appropriate to use the last 1-2 years of data as a thumb rule.
Q39.
Which data source is typically the best for withdrawal experience analysis?

a.

Industry-wide statistics

b.

Policy administration system data

c.

Customer surveys

d.

Financial reports

Discuss
Answer: (b).Policy administration system data Explanation:The best source for withdrawal experience analysis is typically the actual policy data maintained in the policy administration system within the company.
Q40.
Which factors are typically considered in the grouping of data for withdrawal experience analysis?

a.

Type of contract, duration in force, sales method used, and target market

b.

Premium frequency, size of premium, and premium payment method

c.

Type of contract, frequency and size of premium, and original term of contract

d.

Duration in force, premium payment method, and original term of contract

Discuss
Answer: (a).Type of contract, duration in force, sales method used, and target market Explanation:The factors typically considered in the grouping of data for withdrawal experience analysis include the type of contract, duration in force, sales method used, and target market.
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