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 12 of 13

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Q111.
Which factor should pricing meet for insurance products?

a.

Regulatory requirements

b.

Customer preferences

c.

Insurer's financial and marketing aspirations

d.

Competitor's pricing

Discuss
Answer: (c).Insurer's financial and marketing aspirations Explanation:Pricing should meet the insurer's financial and marketing aspirations.
Q112.
How can the equation of value for insurance products be expressed?

a.

Present Value of Premium(s) = Present Value of Benefit(s)

b.

Present Value of Premium(s) = Present Value of Benefit(s) + Present Value of Expenses

c.

Present Value of Premium(s) = Present Value of Expenses

d.

Present Value of Benefit(s) = Present Value of Expenses

Discuss
Answer: (b).Present Value of Premium(s) = Present Value of Benefit(s) + Present Value of Expenses Explanation:In the case of insurance products, the equation of value can be expressed as Present Value of Premium(s) = Present Value of Benefit(s) + Present Value of Expenses.
Q113.
What does the cost of benefit in insurance represent?

a.

The total premium paid by the policyholder

b.

The expenses incurred by the insurer

c.

The pure premium that covers only the amount of benefits

d.

The commission paid to the agents

Discuss
Answer: (c).The pure premium that covers only the amount of benefits Explanation:The cost of benefit in insurance represents the pure premium that meets just the amount of benefits plus reserving cost.
Q114.
What does the cost of expenses in insurance include?

a.

Only administrative expenses

b.

Only underwriting expenses

c.

Procurement expenses, underwriting expenses, administrative expenses, legal and miscellaneous expenses

d.

Only legal expenses

Discuss
Answer: (c).Procurement expenses, underwriting expenses, administrative expenses, legal and miscellaneous expenses Explanation:The cost of expenses in insurance includes procurement expenses, underwriting expenses, administrative expenses, legal, and miscellaneous expenses.
Q115.
What are the types of premium payment?

a.

Single premium payment, Annual premium payment, Monthly premium payment

b.

Single premium payment, Limited premium payment, Regular premium payment

c.

One-time premium payment, Bi-annual premium payment, Quarterly premium payment

d.

Fixed premium payment, Variable premium payment, Flexible premium payment

Discuss
Answer: (b).Single premium payment, Limited premium payment, Regular premium payment Explanation:The types of premium payment in insurance can be single premium payment, limited premium payment, and regular premium payment.
Q116.
How is commission payment usually expressed in insurance?

a.

Fixed amount

b.

Percentage of the policy term

c.

Percentage of the sum assured

d.

Percentage of the premium

Discuss
Answer: (d).Percentage of the premium Explanation:Commission payment in insurance is usually expressed as a percentage of the premium.
Q117.
What influences the pricing of insurance products according to regulations?

a.

Market demand only

b.

Insurer's financial goals only

c.

Regulations only

d.

Both regulations and market demand

Discuss
Answer: (d).Both regulations and market demand Explanation:Regulations have direct as well as indirect influence on the pricing of insurance products.
Q118.
What factors do insurers consider while determining the optimum size of a policy?

a.

Expected volume of business and expected return on shareholder’s funds only

b.

Expected volume of business and expected financial strain only

c.

Expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds

d.

Expected financial strain and factors affecting the expected volume of business only

Discuss
Answer: (c).Expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds Explanation:While determining the optimum size of a policy, insurers consider expected volume of business, expected financial strain, factors affecting the expected volume of business, and expected return on shareholder’s funds.
Q119.
What do insurers consider while determining the expected volume of business?

a.

Design of product and size of premium/cover only

b.

Size of population and service provision only

c.

Design of product, size of population, size of premium/cover, and service provision

d.

Size of premium/cover and service provision only

Discuss
Answer: (c).Design of product, size of population, size of premium/cover, and service provision Explanation:While determining the expected volume of business, insurers consider the design of the product, size of population, size of premium/cover, and service provision.
Q120.
Pricing of insurance products is directly related to which of the below?

a.

Income of the individuals

b.

Revenue levels of the insurance company

c.

Guidelines of the Finance Ministry

d.

Tax benefits provided by the Government

Discuss
Answer: (b).Revenue levels of the insurance company Explanation:Pricing is directly related to revenue levels of the insurance company.
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