Types of Insurance Products Individual MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Types of Insurance Products Individual, 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 Individual MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Types of Insurance Products Individual MCQs | Page 16 of 17

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Q151.
What guarantees do insurers offer on payment of benefits and premiums?

a.

Guaranteed investment returns

b.

Guaranteed bonus payments

c.

Guaranteed surrender value

d.

Guaranteed profit-sharing

Discuss
Answer: (c).Guaranteed surrender value Explanation:Insurers offer certain guarantees on payment of benefits and premiums, such as guaranteed surrender value.
Q152.
What do insurance contracts offer in exchange for extra premium?

a.

Guaranteed profits

b.

Guaranteed bonuses

c.

Extra protection with no added benefits

d.

Extra benefits such as profits, bonuses, or dividends

Discuss
Answer: (d).Extra benefits such as profits, bonuses, or dividends Explanation:Insurance contracts offer profits, bonuses, or dividends for some extra premium, providing extra benefits with a certain amount of risk.
Q153.
Life Insurance Business means ____________________________________.

a.

Any contract where the payment of money is assured on the happening of any contingency dependent on human life or death (except death by accident only)

b.

Business of effecting contracts of insurance upon human life

c.

Any contract which is subject to payment of premiums for a term dependent on human life

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:“Life Insurance Business" means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life.
Q154.
When the sum assured is returned to the policyholder at periodic intervals, it is referred to as ____________.

a.

Deferred Assurance

b.

Money Back Assurance

c.

Pure Endowment Assurance

d.

Pure Term Assurance

Discuss
Answer: (b).Money Back Assurance Explanation:When the sum assured is returned to the policyholder at periodic intervals, it is referred to as Money back assurance.
Q155.
Which of the following is not a characteristic of riders?

a.

The option is valid only if the main contract is valid.

b.

The grant of option could be subject to underwriting requirements.

c.

The option cannot be cancelled when the main contract is in force

d.

It provides additional benefit only on the happening of a specified event

Discuss
Answer: (c).The option cannot be cancelled when the main contract is in force Explanation:The option cannot be cancelled when the main contract is in force is incorrect. The option can be cancelled only when the main contract is in force.
Q156.
Which of the following is not an example of an ‘Option’?

a.

Changing the ownership of the policy

b.

Changing the mode of payment of premium

c.

Partially surrendering the policy (splitting the policy)

d.

Backdating of policy (at inception of the contract) usually in the same financial year

Discuss
Answer: (b).Changing the mode of payment of premium Explanation:To change the mode of payment of premium is not an option. Changing the mode of payment is ‘Alteration’, not ‘option’.
Q157.
If sum assured is Rs.1,50,000/- and if number of premiums actually paid are 7 and number of premiums actually payable are 10, what is the reduced sum assured?

a.

Rs.1,50,000

b.

Rs.1,05,000

c.

Rs.50,000

d.

Rs.1,00,000

Discuss
Answer: (b).Rs.1,05,000 Explanation:‘t’ is number of premiums paid and ‘n’ is the number of premiums payable. t= 7; n= 10, then the reduced sum assured is Rs. 1,05,000. i.e. Rs.1,50,000 x 7/10 = Rs.1,05,000/-
Q158.
Which of the following is not a method of payment of bonus?

a.

Simple reversionary bonus

b.

Guaranteed interest rates

c.

Paid-up additions

d.

Discount in premium

Discuss
Answer: (b).Guaranteed interest rates Explanation:Guaranteed interest rate is the ‘Guarantee’ given in an insurance contract, not a method of bonus payment.
Q159.
Investment linked contracts provide which of the below?

a.

Investment Benefits

b.

Saving benefits

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Unit linked contracts provide investment benefits as well as saving benefits.
Q160.
Mr. Sam buys an Endowment Assurance contract with profits for a Sum assured of Rs. 200,000/- and a policy term of 10 years.

He dies in the 5th policy year (i.e. after payment of 5 annual premiums).
Total vested bonus for 5 years is Rs.32,000/-. What is the benefit payable on his death?

a.

Rs.32,000

b.

Rs.2,00,000

c.

Rs.2,32,000

d.

Rs.1,68,000

Discuss
Answer: (c).Rs.2,32,000 Explanation:Benefit payable on death = Sum assured + Vested bonus = Rs.2,00,000 + Rs.32,000 = Rs.2,32,000
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