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 9 of 13

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Q81.
What is the first step in premium calculations?

a.

Calculate expected investment income

b.

Determine group size

c.

Calculate pure risk premium

d.

Analyze expense factors

Discuss
Answer: (c).Calculate pure risk premium Explanation:The first step in premium calculations involves calculating the pure risk premium, which is the expected claim cost based on factors such as sum assured and expected mortality rate for the group.
Q82.
How is the gross premium calculated?

a.

By subtracting investment income from expenses

b.

By adding up expected claim costs

c.

By adding expenses, commissions, taxes, and profit margin to expected claim costs

d.

By dividing expenses by group size

Discuss
Answer: (c).By adding expenses, commissions, taxes, and profit margin to expected claim costs Explanation:The gross premium is calculated by adding various components such as expenses, commissions, taxes, and profit margin to the expected claim costs.
Q83.
Which of the following is NOT considered when handling expenses for group insurance?

a.

Actuarial support

b.

Marketing expenses

c.

Employee salaries and benefits

d.

Investment income

Discuss
Answer: (d).Investment income Explanation:Investment income is not typically considered when handling expenses for group insurance. Expenses usually include various operational costs such as actuarial support, marketing expenses, and employee salaries and benefits.
Q84.
How might expenses be expressed in group insurance?

a.

Only in terms of first-year expenses

b.

Only in terms of renewal year expenses

c.

Separate for first year and renewal years

d.

Only as a percentage of total expected claim cost

Discuss
Answer: (c).Separate for first year and renewal years Explanation:Expenses in group insurance may be expressed separately for first-year expenses and renewal year expenses to account for differences in costs and expenses incurred.
Q85.
In what way do expense loadings typically vary with group size?

a.

They increase proportionally with group size

b.

They decrease proportionally with group size

c.

They remain fixed regardless of group size

d.

They fluctuate randomly with group size

Discuss
Answer: (b).They decrease proportionally with group size Explanation:Expense loadings often decrease proportionally with group size, meaning that larger groups may incur lower expenses per member compared to smaller groups.
Q86.
What might a new insurance company do with a large part of its expenses?

a.

Allocate them to investment opportunities

b.

Amortize them over a number of years

c.

Use them to increase profit margins

d.

Share them with existing insurance companies

Discuss
Answer: (b).Amortize them over a number of years Explanation:A new insurance company may amortize a large part of its expenses over a number of years, especially considering the difficulty in projecting business growth and the competitive nature of the market.
Q87.
What is one of the challenges in projecting group business growth for new insurance companies?

a.

Limited expense data

b.

Inadequate investment opportunities

c.

Unpredictable mortality rates

d.

Competitive market dynamics

Discuss
Answer: (d).Competitive market dynamics Explanation:One of the challenges in projecting group business growth for new insurance companies is the competitive nature of the market, where multiple companies may bid for the same schemes, making growth projections uncertain.
Q88.
How are commissions typically structured in insurance?

a.

As a fixed percentage of the premium

b.

As a fixed amount per contract

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Commissions in insurance can be structured as either a simple percentage of the premium, a fixed amount per contract, or a combination of both.
Q89.
What is the overriding principle regarding commission rates in insurance?

a.

To maximize profits for the insurer

b.

To ensure compliance with regulatory limits

c.

To reward high-performing agents

d.

To offer competitive rates to clients

Discuss
Answer: (b).To ensure compliance with regulatory limits Explanation:The overriding principle regarding commission rates in insurance is to ensure compliance with regulatory limits set by authorities such as the Insurance Regulatory and Development Authority of India (IRDAI).
Q90.
How is stamp duty accounted for in insurance plans?

a.

It is spread over a reasonable period

b.

It is charged separately at plan inception

c.

It is amortized over 3 to 5 years

d.

It is paid fully at plan inception

Discuss
Answer: (b).It is charged separately at plan inception Explanation:Stamp duty in insurance plans is typically charged separately at plan inception, although some insurers may choose to amortize the charge over a period of 3 to 5 years.
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