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 3 of 13

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Q21.
Which of the following is NOT typically covered under administrative expenses in insurance?

a.

Handling premium payments

b.

Handling settlement of claims

c.

Resolving doubts posed by policyholders

d.

Payment of shareholder dividends

Discuss
Answer: (d).Payment of shareholder dividends Explanation:Administrative expenses in insurance typically cover tasks such as handling premium payments, settlement of claims, and resolving doubts posed by policyholders. Payment of shareholder dividends is not typically included in administrative expenses.
Q22.
What is the primary consideration for a new insurer in estimating expenses while pricing insurance products?

a.

Future market demand

b.

Current and future expenses of the insurance industry

c.

Estimated profits

d.

Reinsurance costs

Discuss
Answer: (b).Current and future expenses of the insurance industry Explanation:A new insurer, when pricing insurance products, would primarily consider the current and future expenses of the insurance industry to estimate its own expenses.
Q23.
What types of expenses are typically related to premium payments in insurance?

a.

Administrative expenses only

b.

Commission payments and incentives

c.

Reinsurance costs

d.

Legal expenses

Discuss
Answer: (b).Commission payments and incentives Explanation:Expenses related to premium payments in insurance typically include commission payments and incentives, along with certain administrative expenses such as premium collection.
Q24.
Which of the following is NOT a type of premium payment method?

a.

Single premium payment

b.

Limited premium payments

c.

Irregular premium payments

d.

Regular premium payments

Discuss
Answer: (c).Irregular premium payments Explanation:Irregular premium payments are not a recognized type of premium payment method. The recognized methods are single premium payment, limited premium payments, and regular premium payments.
Q25.
What are examples of initial fixed expenses incurred by insurers?

a.

Premium collection expenses only

b.

Transport expenses, media expenses, and underwriting salary expenses

c.

Administrative expenses only

d.

Legal expenses and stamp duty costs

Discuss
Answer: (b).Transport expenses, media expenses, and underwriting salary expenses Explanation:Initial fixed expenses incurred by insurers include transport expenses, media expenses, and underwriting salary expenses, among others.
Q26.
Why are insurers often reluctant to sell small premium policies?

a.

They require high initial expenses compared to premium income

b.

They lead to higher profits

c.

They have lower administrative costs

d.

They are easier to underwrite

Discuss
Answer: (a).They require high initial expenses compared to premium income Explanation:Insurers are often reluctant to sell small premium policies because the initial expenses for such policies can be disproportionately high compared to the premium income.
Q27.
How are underwriting expenses typically expressed?

a.

As a flat amount per policy

b.

As a percentage of premiums

c.

As a percentage of sum assured

d.

As a fixed annual fee

Discuss
Answer: (c).As a percentage of sum assured Explanation:Underwriting expenses are usually expressed as a percentage of the sum assured.
Q28.
When do insurers typically insist on medical examination and reports for a life assured?

a.

When the policyholder requests it

b.

When the sum assured is very low

c.

When the sum assured is very high or the age of the assured is very high

d.

When the policyholder has a clean medical history

Discuss
Answer: (c).When the sum assured is very high or the age of the assured is very high Explanation:Insurers typically insist on medical examination and reports for a life assured when the sum assured is very high or the age of the assured is very high.
Q29.
What is the purpose of medical expenses borne by insurers?

a.

To provide medical treatment to the policyholder

b.

To assess the mortality risk of the life assured

c.

To cover administrative costs

d.

To increase the profitability of the insurer

Discuss
Answer: (b).To assess the mortality risk of the life assured Explanation:The purpose of medical expenses borne by insurers is to assess the mortality risk of the life assured.
Q30.
How are medical expenses typically determined by insurers?

a.

As a flat fee per policy

b.

As a percentage of the sum assured

c.

As a percentage of the premium

d.

As a fixed annual fee

Discuss
Answer: (b).As a percentage of the sum assured Explanation:Medical expenses are typically determined by insurers as a fixed amount per 1000 sum assured.
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