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 3 of 13

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Q21.
What are the common challenges faced by the underwriters while assessing a proposal on a key person?

a.

To qualify the proposed insured as a key person

b.

To determine the potential financial loss to the company on the death of the insured

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The common challenges faced by the underwriters while assessing a proposal on a key person are to qualify the proposed insured as a key person and to quantify the potential financial loss to the company on the death of this insured.
Q22.
What are the aspects that can help in qualifying the proposed insured as a key person?

a.

Age and Level of expertise

b.

A successful track record

c.

Number of key persons in a company

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The following aspects can help in qualifying the proposed insured as a key person: Age, Level of expertise, A successful track record, Earning trends of the company over a period of time, and Number of key persons in a company.
Q23.
According to Indian Law, is there a clear definition of a key person?

a.

Yes

b.

No

c.

It depends on the state

d.

None of the above

Discuss
Answer: (b).No Explanation:According to the Indian Law, there is no clear definition available of a key person.
Q24.
Why is a person who is very old not a good fit as a key person?

a.

They lack expertise

b.

They have unstable earning trends

c.

They are nearing retirement

d.

None of the above

Discuss
Answer: (c).They are nearing retirement Explanation:A person who is very old (say 59 years) who is nearing retirement, will not be a good fit as a key person.
Q25.
What makes a person qualified as a key person in terms of their level of expertise?

a.

High level of technical expertise

b.

High level of management skills

c.

Exposure in different fields

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:A person with a high level of technical expertise or management skills and exposure in different fields can make them indispensable and qualify them as a key person.
Q26.
Why is a successful track record important in qualifying a person as a key person?

a.

It demonstrates their level of expertise

b.

It shows their ability to contribute to the company

c.

It is easier to evaluate the value of a key person with a good earnings trend

d.

None of the above

Discuss
Answer: (c).It is easier to evaluate the value of a key person with a good earnings trend Explanation:A person should have a successful track record in the area of their expertise to be qualified as a key person because it will be easier to evaluate the value of a key person with a good earnings trend rather than an unstable earning trend.
Q27.
What is the importance of the number of key persons in a company in confirming the criticality of a person to the company?

a.

The more the number of key persons, the easier it is to confirm the criticality of the person to the company

b.

The fewer the number of key persons, the easier it is to confirm the criticality of the person to the company

c.

The number of key persons in a company has no impact on the criticality of a person to the company

d.

None of the above

Discuss
Answer: (b).The fewer the number of key persons, the easier it is to confirm the criticality of the person to the company Explanation:Fewer the number of key persons in a company, the easier it is to confirm the criticality of the person to the company. This means that if there are only a few key persons in a company, it is easier to assess the value of each individual's contribution and determine their criticality to the company.
Q28.
Why is it easier to evaluate the value of a key person with a good earnings trend?

a.

Because it is easier to predict future earnings

b.

Because it is easier to assess the potential financial loss to the company

c.

Because it indicates that the key person's contribution to the company is significant

d.

None of the above

Discuss
Answer: (c).Because it indicates that the key person's contribution to the company is significant Explanation:A good earnings trend indicates that the key person's contribution to the company is valuable, and therefore, the potential financial loss to the company on the death of the key person would be significant. This makes it easier to evaluate the value of a key person with a good earnings trend.
Q29.
What is the primary reason to purchase keyman insurance?

a.

To indemnify the company against the loss of a key person

b.

To provide additional coverage for the employees of the company

c.

To secure the financial future of the key person

d.

None of the above

Discuss
Answer: (a).To indemnify the company against the loss of a key person Explanation:The primary reason to purchase keyman insurance is to indemnify the company against the loss of a key person whose skills and contribution are critical to the company.
Q30.
What are the common challenges faced by underwriters while assessing a keyman insurance proposal?

a.

Qualifying the proposed insured as a key person

b.

Quantifying the potential financial loss to the company on the death of the insured

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Two main challenges that are faced by underwriters: qualifying the proposed insured as a key person and quantifying the potential financial loss to the company on the death of the insured.
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