Pricing of Products I MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Pricing of Products I, 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 Pricing of Products I 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 Pricing of Products I mcq questions that explore various aspects of Pricing of Products I problems. Each MCQ is crafted to challenge your understanding of Pricing of Products I 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 Pricing of Products I MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Pricing of Products I MCQs | Page 11 of 13

Discover more Topics under IC 92 Actuarial Aspects of Product Development

Q101.
When is the Partial withdrawal charge levied?

a.

At the beginning of each policy month

b.

At the time of part withdrawal of the fund during the contract period

c.

At the time of policy issuance

d.

At the time of policy surrender

Discuss
Answer: (b).At the time of part withdrawal of the fund during the contract period Explanation:The Partial withdrawal charge is levied on the unit fund at the time of part withdrawal of the fund during the contract period in unit linked products.
Q102.
When is the Miscellaneous charge levied?

a.

At the time of policy issuance

b.

At the time of policy surrender

c.

Only at the time of policy alteration

d.

At the beginning of each policy month

Discuss
Answer: (c).Only at the time of policy alteration Explanation:The Miscellaneous charge is levied for any alterations within the contract, such as an increase in sum assured, premium redirection, or change in policy term. It is expressed as a flat amount and is levied only at the time of alteration.
Q103.
What is the limitation on charges for unit linked products?

a.

Charges can be modified without approval from the IRDA

b.

All charges must have an upper limit specified in promotional material and policy documents

c.

There is no upper limit on any charges

d.

The cap on Fund Management Charges is 200 basis points

Discuss
Answer: (b).All charges must have an upper limit specified in promotional material and policy documents Explanation:All charges for unit linked products must have an upper limit specified in all promotional material and policy documents.
Q104.
What is the cap on Fund Management Charges for each segregated fund?

a.

50 basis points

b.

100 basis points

c.

135 basis points

d.

200 basis points

Discuss
Answer: (c).135 basis points Explanation:The cap on Fund Management Charges for each segregated fund is 135 basis points.
Q105.
What is the purpose of the Reduction in Yield requirement for linked and variable insurance products?

a.

To increase the difference between gross and net yield

b.

To ensure that gross yield is always higher than net yield

c.

To ensure that net yield is always higher than gross yield

d.

To limit the difference between gross and net yield to specified limits

Discuss
Answer: (d).To limit the difference between gross and net yield to specified limits Explanation:The Reduction in Yield requirement aims to limit the difference between gross and net yield to specified limits, ensuring transparency and fairness to policyholders. If there is any difference, it will be funded by the company.
Q106.
What is the maximum allowable net reduction in yield at maturity for policies with a term of more than 10 years?

a.

1.50%

b.

2.25%

c.

2.75%

d.

3.00%

Discuss
Answer: (b).2.25% Explanation:The maximum allowable net reduction in yield at maturity for policies with a term of more than 10 years is 2.25%.
Q107.
What are non-negative claw-back additions in unit linked products?

a.

Additional charges imposed on policyholders

b.

Specific deductions from policy account value

c.

Specific non-negative additions to policy account value

d.

Extra premiums for underwriting

Discuss
Answer: (c).Specific non-negative additions to policy account value Explanation:Non-negative claw-back additions in unit linked products are specific non-negative additions to policy account value.
Q108.
How should mortality and morbidity charges be treated in the calculation of net yield?

a.

Excluded from the calculation

b.

Included in the calculation

c.

Ignored in the calculation

d.

Adjusted as per the policy terms

Discuss
Answer: (a).Excluded from the calculation Explanation:Mortality and morbidity charges should be excluded from the calculation of net yield.
Q109.
What is the basis for calculating the net yield?

a.

Projection of end fund on a monthly basis

b.

Projection of end fund on an annual basis

c.

Gross investment returns only

d.

Premiums paid at the beginning of the policy term

Discuss
Answer: (a).Projection of end fund on a monthly basis Explanation:The net yield is calculated based on the projection of end fund on a monthly basis at a specified gross rate of return.
Q110.
What is the term used for the price paid for buying insurance?

a.

Premium

b.

Benefit

c.

Expense

d.

Cost

Discuss
Answer: (a).Premium Explanation:The price paid for buying insurance is called 'Premium'.
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