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

Q11.
Why is it important to understand who the beneficiary of the insurance policy is for non-working women?

a.

To ensure that the beneficiary is financially capable of taking care of the insured's family in case of any unfortunate event

b.

To understand the needs and financial profile of the beneficiary

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The beneficiary of an insurance policy plays an important role in the event of the insured's death. For non-working women, it is important to understand who the beneficiary of the policy is in order to ensure that they are financially capable of taking care of the insured's family in case of any unfortunate event. Additionally, understanding the needs and financial profile of the beneficiary can help in determining the appropriate amount of insurance cover and the type of plan that is suitable for the insured.
Q12.
What is the overall purpose of financial underwriting in insurance?

a.

To ensure that the insured or their beneficiaries are not put in a better financial position by the occurrence of an insured event

b.

To determine the medical conditions of the individual for insurance coverage

c.

To determine the age of the individual for insurance coverage

d.

To determine the location of the individual for insurance coverage

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.
Q13.
What is insurable interest?

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

b.

The process of verifying insurance needs

c.

The process of assessing violence potential

d.

The process of determining the quantified value of financial need

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.
Q14.
What are the objectives of financial underwriting?

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

b.

To maximize fraudulent claims, maximize adverse claims experience due to anti-selection, and maximize the early lapse and surrender due to the insured not being able to pay the premium

c.

To minimize fraudulent claims, maximize 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

d.

To maximize fraudulent claims, minimize adverse claims experience due to anti-selection, and maximize the early lapse and surrender due to the insured not being able to pay the premium

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.
Q15.
What are a few examples of valid insurable interest?

a.

Self, spouse, children, assets

b.

Self, spouse, pets, assets

c.

Self, parents, children, assets

d.

Self, spouse, children, liabilities

Discuss
Answer: (a).Self, spouse, children, assets Explanation:Some examples of valid insurable interest are self, spouse, children, and assets.
Q16.
What is the concept of insurable interest in life insurance?

a.

The beneficiary must have a financial interest in the continued existence of the insured

b.

The sum assured must not exceed the quantified value of the financial need

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Insurable interest means that the beneficiary under the policy should 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. Also, the sum assured must not exceed the quantified value of that financial need.
Q17.
Who can take life insurance for themselves?

a.

Only employed individuals

b.

Only married individuals

c.

Anyone can take life insurance for themselves

d.

None of the above

Discuss
Answer: (c).Anyone can take life insurance for themselves Explanation:A person has unlimited insurable interest in his/her own life, and can take life insurance for themselves of any amount.
Q18.
Can children take insurance for their parents?

a.

Yes, it is allowed

b.

No, it is not allowed and is considered a moral hazard

c.

It depends on the insurance company

d.

None of the above

Discuss
Answer: (b).No, it is not allowed and is considered a moral hazard Explanation:Parents can take insurance for their children, but children buying insurance cover (except pension plans) for their parents are not allowed and is taken as a moral hazard.
Q19.
What can be considered as valid insurable interest under common law?

a.

Self

b.

Spouse

c.

Parents-children

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Common law recognizes self, spouse, parents-children, and assets as valid insurable interest.
Q20.
Can an individual take life insurance for themselves of any amount?

a.

Yes

b.

No

c.

Depends on the insurance company's underwriting criteria

d.

None of the above

Discuss
Answer: (a).Yes Explanation:A person has unlimited insurable interest in his/her own life, and can take life insurance for themselves of any amount.
Page 2 of 13