Financial Underwriting MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Financial Underwriting, a fundamental topic in the field of IC22 Life Insurance Underwriting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Financial Underwriting 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 Financial Underwriting mcq questions that explore various aspects of Financial Underwriting problems. Each MCQ is crafted to challenge your understanding of Financial Underwriting principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC22 Life Insurance Underwriting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Financial Underwriting MCQs are your pathway to success in mastering this essential IC22 Life Insurance Underwriting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Financial Underwriting. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Financial Underwriting knowledge to the test? Let's get started with our carefully curated MCQs!

Financial Underwriting MCQs | Page 2 of 13

Discover more Topics under IC22 Life Insurance Underwriting

Discuss
Answer: (a).To ensure that the amount of insurance applied for is justified based on the potential economic loss that will be suffered in the event of the individual's death Explanation:The role of financial underwriting is to make sure that the amount of insurance applied for by an individual is justified based on the potential economic loss that will be suffered in the event of the individual's death.
Q12.
What is the importance of considering the health status and cover of siblings and parents while insuring the life of a child?
Discuss
Answer: (b).To minimise moral hazard Explanation:The importance of considering the health status and cover of siblings and parents while insuring the life of a child is to minimize moral hazard. This means that insurers need to assess the risks associated with insuring the child, taking into account the health status and insurance coverage of the parents and siblings, to ensure that the insurance policy is not being taken out purely for financial gain and that it is providing real protection for the child's future.
Discuss
Answer: (c).To offer financial security for the children's future Explanation:Child insurance plans are purchased by parents to secure the financial future of their children, particularly in the case of an unfortunate event like the parents' untimely death. These plans help parents save funds for their children's education, marriage, and other financial needs. By providing financial security for the children's future, child insurance plans ensure that children are protected against unforeseen financial contingencies.
Discuss
Answer: (c).A rider that makes sure the plan continues in case of the parent's untimely death Explanation:The 'waiver of premium' built-in rider is a feature in most child plans that ensures the plan continues in case of the parent's untimely death. In such a scenario, the parent's premium payments are waived off, and the insurance company continues to pay the premium on their behalf to keep the policy in force. This ensures that the child's financial security is not compromised even if the parent is no longer able to make premium payments.
Discuss
Answer: (a).To indemnify the company against the loss of the key person Explanation:The primary reason for a company to purchase life insurance on the life of a key person is to indemnify the company against the loss of the key person whose skills and contribution are critical to the company.
Discuss
Answer: (a).The situation where the amount of insurance applied for is in excess of the potential economic loss Explanation:Adverse selection (also termed as anti-selection) is the situation where the amount of insurance applied for is in excess of the potential economic loss.
Discuss
Answer: (a).To ensure that the amount of insurance applied for will adequately compensate the beneficiary in the event of an untimely loss Explanation:Every proposal for insurance should be financially underwritten to ensure that the amount of insurance applied for will adequately compensate the beneficiary in the event of an untimely loss.
Discuss
Answer: (a).To ensure that the insured or their beneficiaries are not put in a better financial position by the occurrence of an insured event Explanation:The overall purpose of financial underwriting is to ensure that the insured or their beneficiaries are not put in a better financial position by the occurrence of an insured event.
Discuss
Answer: (a).The owner of the insurance must have a financial interest in the continued existence of the insured and would suffer significant financial loss in the event of death of the insured Explanation:Insurable interest is one of the basic concepts of life insurance, where the owner of the insurance must have a financial interest in the continued existence of the insured and would suffer significant financial loss in the event of death of the insured.
Discuss
Answer: (a).To minimize fraudulent claims, minimize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium Explanation:The objectives of financial underwriting are to minimize fraudulent claims, minimize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium.