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 9 of 17

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Q81.
What is the primary characteristic of a Term Assurance contract?

a.

It provides both death benefit and survival benefits.

b.

It offers benefits only on the death of the policyholder.

c.

It guarantees a return of premiums paid upon maturity.

d.

It allows for the accumulation of cash value over time.

Discuss
Answer: (b).It offers benefits only on the death of the policyholder. Explanation:Term Assurance contracts provide a death benefit only if the policyholder passes away during the term of the policy. No benefit is paid if the policyholder survives the term.
Q82.
Which type of insurance contract offers a lump-sum payment upon the diagnosis of critical illnesses?

a.

Endowment Insurance

b.

Whole Life Assurance

c.

Critical Illness Assurance

d.

Increasing Term Assurance

Discuss
Answer: (c).Critical Illness Assurance Explanation:Critical Illness Assurance contracts provide a lump-sum cash payment upon the diagnosis of specified critical illnesses listed in the policy.
Q83.
In a Deferred Annuity with Life Cover, what happens if the policyholder dies during the deferment period?

a.

The premiums are forfeited.

b.

The death benefit is paid to the nominee.

c.

The policy continues with adjusted premiums.

d.

The contract automatically converts to an Immediate Annuity.

Discuss
Answer: (b).The death benefit is paid to the nominee. Explanation:In such contracts, a death benefit is provided during the deferment period, which could be substantial and paid to the nominee upon the death of the policyholder.
Q84.
What distinguishes an Immediate Annuity in arrears from an Immediate Annuity due?

a.

The frequency of annuity payments.

b.

The timing of the first annuity payment.

c.

The inclusion of survival benefits.

d.

The availability of a lump-sum payment option.

Discuss
Answer: (b).The timing of the first annuity payment. Explanation:An Immediate Annuity due starts annuity payments immediately upon purchase, while an Immediate Annuity in arrears starts payments after a specified period from the purchase date.
Q85.
What is a characteristic feature of Increasing Immediate Annuity contracts?

a.

The annuity amount decreases over time.

b.

The annuity amount remains constant throughout.

c.

The annuity amount increases annually by a specified rate.

d.

The annuity amount is paid in a lump sum.

Discuss
Answer: (c).The annuity amount increases annually by a specified rate. Explanation:Increasing Immediate Annuity contracts provide annuity payments that increase annually by a predetermined percentage.
Q86.
What are riders in insurance contracts primarily designed for?

a.

To decrease the premiums paid by the policyholder

b.

To provide additional benefits beyond the main contract

c.

To replace the main contract with a more comprehensive one

d.

To offer investment opportunities alongside insurance

Discuss
Answer: (b).To provide additional benefits beyond the main contract Explanation:Riders are optional add-ons to the main insurance contract, offering extra benefits based on specified events.
Q87.
When does the option to include a rider become valid?

a.

When the policyholder reaches a certain age

b.

When the main contract matures

c.

When the policyholder chooses to exercise the option

d.

When the main contract is in force

Discuss
Answer: (d).When the main contract is in force Explanation:The option to include a rider is valid only when the main insurance contract is active and in force.
Q88.
What event triggers the benefits provided by the Permanent Disability Rider?

a.

Death of the policyholder

b.

Disability due to aging

c.

Permanent disability from an accident or disease

d.

Diagnosis of a critical illness

Discuss
Answer: (c).Permanent disability from an accident or disease Explanation:The Permanent Disability Rider provides benefits in the event of permanent disability resulting from an accident or disease.
Q89.
What is the primary purpose of the Term Rider?

a.

To extend the term of the insurance contract

b.

To provide additional death benefit

c.

To waive future premiums in case of disability

d.

To provide benefits for temporary disabilities

Discuss
Answer: (b).To provide additional death benefit Explanation:The Term Rider offers an additional death benefit beyond the coverage provided by the main insurance contract.
Q90.
What condition must be met for the Accident Benefit Rider to pay out its benefits?

a.

Death due to any cause

b.

Death due to natural causes only

c.

Death due to accident as defined in the contract

d.

Death due to self-inflicted injuries

Discuss
Answer: (c).Death due to accident as defined in the contract Explanation:The Accident Benefit Rider provides additional benefits only in the event of death resulting from accidents as defined in the insurance contract.
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