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 4 of 13

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Q31.
Which contract pays a specified sum on the death of an individual member during the contract period?

a.

Group health insurance contract

b.

Group gratuity contract

c.

Group term insurance contract

d.

Group superannuation (pension) contract

Discuss
Answer: (c).Group term insurance contract Explanation:A group term insurance contract ensures that a specified sum is paid upon the death of an individual member, if the death occurs during the period of the contract.
Q32.
What determines the premiums charged in group insurance contracts?

a.

The total number of group members only

b.

The geographical location of the group members

c.

Age, health, occupation, and type of group

d.

The investment strategy of the insurance company

Discuss
Answer: (c).Age, health, occupation, and type of group Explanation:Premiums in group insurance contracts are charged based on age, health, occupation, and the type of group, reflecting the risk factors associated with the group members.
Q33.
What characterizes a group gratuity contract?

a.

It provides a lump sum payment only in case of the member's retirement.

b.

It offers coverage for health-related expenses only.

c.

It pays benefits related to length of service and salary upon death, resignation, or retirement.

d.

It is a savings plan for future medical emergencies.

Discuss
Answer: (c).It pays benefits related to length of service and salary upon death, resignation, or retirement. Explanation:A group gratuity contract pays benefits related to length of service and salary upon death, resignation, or retirement.
Q34.
What does a group savings linked insurance contract offer to individual members?

a.

A fixed benefit amount payable only on retirement

b.

A fixed benefit amount payable on death, resignation, or retirement, plus a savings element

c.

A benefit based solely on the accumulated contributions with no fixed death benefit

d.

Coverage for health-related expenses only

Discuss
Answer: (b).A fixed benefit amount payable on death, resignation, or retirement, plus a savings element Explanation:A group savings linked insurance contract provides a fixed benefit amount in case of death and an additional benefit that includes the accumulated amount of contributions (premiums allocated to the savings element) on the date of cessation of service. This type of contract offers benefits payable on death, resignation, or retirement, combining insurance coverage with a savings component.
Q35.
How does an insured group contract define the relationship between the insurer, group policyholder, and individual members?

a.

The insurer deals directly with each individual member, offering personalized terms.

b.

The contract is between the insurer and the individual members, without any intermediary.

c.

The contract is between the insurer and the group policyholder; individual members are not parties to the contract.

d.

Individual members negotiate terms and conditions directly with the insurer.

Discuss
Answer: (c).The contract is between the insurer and the group policyholder; individual members are not parties to the contract. Explanation:In an insured group contract, the agreement is between the insurer and the group policyholder. The individual members are life assured under the policy taken by the group policyholder, but they do not directly engage in the contract negotiation or agreement. The insurer deals with the group policyholder for all terms, conditions, and rates, not with individual members.
Q36.
What distinguishes group insurance policies from individual insurance policies?

a.

Group insurance policies cover a single individual with personalized terms.

b.

Group insurance involves higher commissions to sales intermediaries.

c.

Group insurance policies provide coverage to multiple individuals under a single policy.

d.

Each member of a group insurance policy receives an individual contract.

Discuss
Answer: (c).Group insurance policies provide coverage to multiple individuals under a single policy. Explanation:Group insurance policies differ from individual insurance policies by providing coverage to multiple individuals under a single policy, known as a master policy. This approach is cost-efficient and simplifies the insurance process for a large number of individuals, contrasting with individual policies where each policyholder has a separate contract.
Q37.
Why is group insurance considered cost-efficient?

a.

Because it requires comprehensive underwriting for each individual.

b.

It is not cost-efficient; it has higher operational expenses than individual policies.

c.

Due to lower commissions, reduced acquisition expenses, and simplified administrative processes.

d.

Each member's data requires extensive and individualized valuation.

Discuss
Answer: (c).Due to lower commissions, reduced acquisition expenses, and simplified administrative processes. Explanation:Group insurance is considered cost-efficient due to several factors: it generally involves proportionally lower commissions to sales intermediaries compared to individual policies, has lower acquisition and administrative expenses, and bypasses the need for individual underwriting. Additionally, the premium collection process is streamlined through payroll deductions or a single payment from the employer, further reducing costs.
Q38.
What is the primary purpose of individual pure term insurance policies?

a.

To provide a savings component to the policyholder

b.

To spread the risk among a group of people

c.

To cover large numbers of individuals under a single policy

d.

To pay a specified sum assured if the insured event occurs

Discuss
Answer: (d).To pay a specified sum assured if the insured event occurs Explanation:Individual pure term insurance policies are designed to offer financial protection to the beneficiaries in case of the policyholder's death within the term of the policy. The policyholder pays a premium for a specified coverage amount (sum assured), and the insurer commits to paying this amount if the insured event, typically the death of the policyholder, happens according to the policy's terms and conditions. There is no savings or investment component involved in these policies.
Q39.
What differentiates group insurance from individual insurance?

a.

The issuance of individual contracts to each member

b.

The use of a master policy to cover a group of people

c.

Higher commissions to sales intermediaries

d.

The requirement for individual underwriting for each member

Discuss
Answer: (b).The use of a master policy to cover a group of people Explanation:Group insurance differs from individual insurance primarily because it covers a group of people under a single policy, known as the master policy, rather than issuing individual contracts to each member. This approach streamlines the administration of the policy and helps to reduce costs, making it a cost-efficient way to provide insurance coverage to a large number of individuals.
Q40.
Why is group insurance considered cost-efficient?

a.

Due to higher premiums charged to individuals

b.

Because it covers only a small number of people

c.

Owing to lower commissions and acquisition expenses

d.

Because it requires detailed individual data and valuations

Discuss
Answer: (c).Owing to lower commissions and acquisition expenses Explanation:Group insurance is considered cost-efficient for several reasons, including proportionally lower commissions paid to sales intermediaries and lower acquisition expenses. Additionally, the nature of group insurance pre-empts the need for individual underwriting and utilizes a single contract with the plan sponsor, reducing the administrative costs associated with issuing individual policies. This efficiency is further enhanced by collecting premiums through methods like payroll deductions or a single payment from the employer.
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