Types of Insurance Products Group MCQs

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

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Types of Insurance Products Group MCQs | Page 10 of 13

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Q91.
What is the purpose of the risk and profit load in insurance premium calculations?

a.

To maximize insurer profits

b.

To offset expenses incurred

c.

To reflect mortality mis-estimation and other risks

d.

To provide investment income

Discuss
Answer: (c).To reflect mortality mis-estimation and other risks Explanation:The risk and profit load in insurance premium calculations is intended to reflect factors such as mortality mis-estimation, expense risks, and lapse risks, thereby ensuring that the final premium rate accounts for these uncertainties.
Q92.
What factors influence the required return in insurance?

a.

Amount of required solvency and guaranteed rates

b.

Length of rate guarantees and reinsurer arrangements

c.

Group size and risk characteristics

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The required return in insurance is influenced by factors such as the amount of required solvency, guaranteed rates, length of rate guarantees, reinsurer arrangements, group size, and risk characteristics.
Q93.
Why are group life insurance rates on an annual renewable basis usually not guaranteed for more than a single year?

a.

To encourage groups to seek new insurers

b.

To prevent insurer losses from poor experience

c.

To allow for adjustments based on group experience

d.

To provide stability to the insurer

Discuss
Answer: (c).To allow for adjustments based on group experience Explanation:Group life insurance rates on an annual renewable basis are usually not guaranteed for more than a single year to allow for adjustments based on group experience. This ensures that rates can be adjusted accordingly if the group's experience is better or worse than expected.
Q94.
What is the purpose of retrospective experience rating or profit sharing in group insurance?

a.

To reflect future profitability of the insurer

b.

To adjust premiums based on past group experience

c.

To encourage group loyalty to the insurer

d.

To provide investment income to the insurer

Discuss
Answer: (b).To adjust premiums based on past group experience Explanation:Retrospective experience rating or profit sharing in group insurance allows for adjusting premiums based on past group experience, either reflecting the past experience of a particular group or providing the group with the benefit of good or poor future experience.
Q95.
What does prospective experience rating in group insurance involve?

a.

Adjusting premiums based on future projections

b.

Setting premiums based on historical group experience

c.

Offering guaranteed rates for future coverage periods

d.

Providing investment opportunities to policyholders

Discuss
Answer: (b).Setting premiums based on historical group experience Explanation:Prospective experience rating in group insurance involves setting premiums for future coverage periods based on a group's historical claims experience, to the extent that it is credible and expected to continue into the future.
Q96.
What does retrospective experience rating in group insurance involve?

a.

Adjusting premiums based on future projections

b.

Providing a group with financial benefits or costs based on past claims experience

c.

Offering guaranteed rates for future coverage periods

d.

Allowing groups to participate in investment income

Discuss
Answer: (b).Providing a group with financial benefits or costs based on past claims experience Explanation:Retrospective experience rating in group insurance involves providing a group with financial benefits or costs based on its actual past claims experience over the coverage term.
Q97.
What is one reason why participating group insurance is attractive to both the insured group and the insurer?

a.

To guarantee fixed premiums for future coverage

b.

To minimize insurer profitability

c.

To allow groups to cross-subsidize other groups

d.

To share in excess profits or absorb losses based on experience

Discuss
Answer: (d).To share in excess profits or absorb losses based on experience Explanation:One reason why participating group insurance is attractive to both the insured group and the insurer is that it allows for sharing in excess profits or absorbing losses based on experience, providing financial benefits or costs to the group.
Q98.
How does longer review periods benefit group insurance?

a.

By reducing insurer profitability

b.

By increasing the insurer's security margin

c.

By decreasing the credibility of the group's experience

d.

By increasing the number of life-years of exposure and allowing for better trend discernment

Discuss
Answer: (d).By increasing the number of life-years of exposure and allowing for better trend discernment Explanation:Longer review periods in group insurance benefit by increasing the number of life-years of exposure, allowing for better trend discernment, and providing the insurer with more credible information to adjust rates or distribute profits accordingly.
Q99.
What advantage do with-profit plans in group insurance have over without-profit plans?

a.

They offer lower premiums

b.

They provide guaranteed returns

c.

They have lower variance in claims distribution

d.

They allow for more investment opportunities

Discuss
Answer: (c).They have lower variance in claims distribution Explanation:With-profit plans in group insurance typically have lower variance in claims distribution compared to without-profit plans with equivalent expected profitability. This reduces the insurer's variations in annual profitability.
Q100.
According to the guidelines issued by IRDA of India, what is the minimum number of life years required under a Group Master Policy for considering profit sharing?

a.

500

b.

750

c.

1000

d.

1500

Discuss
Answer: (c).1000 Explanation:The minimum number of life years covered under a Group Master Policy should not be less than 1000 for considering profit sharing, as per the guidelines issued by IRDA of India.
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