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 4 of 13

Discover more Topics under IC22 Life Insurance Underwriting

Q31.
How much is the insurable interest that a person can have in his own life?

a.

A person can have unlimited insurable interest in his own life

b.

A person's insurable interest in his own life is limited to the value of his financial responsibilities like children's education and marriage expenses.

c.

A person's insurable interest in his own life is I imited to the value of his financial liabilities like home loans and other loans.

d.

No insurable interest

Discuss
Answer: (a).A person can have unlimited insurable interest in his own life Explanation:Insurable interest refers to the financial interest that a person has in the life, health or property of another person. When it comes to a person's own life, there is no limit to the amount of insurable interest that they can have. This means that a person can purchase life insurance for themselves for any amount.
Q32.
What are the three methods of arriving at the amount of insurance cover that an individual should take?

a.

Human life value method, needs analysis method, income replacement method

b.

Human life value method, needs analysis method, discount rate method

c.

Human life value method, debt-to-income ratio method, income replacement method

d.

Needs analysis method, debt-to-income ratio method, discount rate method

Discuss
Answer: (a).Human life value method, needs analysis method, income replacement method Explanation:The three methods of arriving at the amount of insurance cover as the human life value method, needs analysis method, and income replacement method.
Q33.
What is the human life value method based on?

a.

The insured's current salary

b.

The insured's estimated potential earnings during the remainder of the working life

c.

The insured's age and gender

d.

The insured's medical history

Discuss
Answer: (b).The insured's estimated potential earnings during the remainder of the working life Explanation:The human life value method is based on quantification of the estimated potential earnings (during the remainder of the working life) of the individual to be insured.
Q34.
What are the factors taken into account while using the human life value method to arrive at the insurance cover amount?

a.

Before tax earnings, expected number of years the income will be earned, annual estimated increase in income, risk-free rate

b.

After tax earnings, expected number of years the income will be earned, annual estimated increase in income, risk-free rate

c.

After tax earnings, expected number of years the income will be earned, annual estimated decrease in income, risk-free rate

d.

After tax earnings, expected number of years the income will be earned, annual estimated increase in income, high-risk rate

Discuss
Answer: (b).After tax earnings, expected number of years the income will be earned, annual estimated increase in income, risk-free rate Explanation:The human life value method takes into account the after-tax earnings, expected number of years the income will be earned (remainder of working life), annual estimated increase in income (salary rise), and a discount factor for future earnings (risk-free rate like the PPF rate).
Q35.
What is the needs analysis method based on?

a.

The insured's current salary

b.

The insured's estimated potential earnings during the remainder of the working life

c.

The insured's financial needs and responsibilities of the beneficiaries

d.

The insured's age and gender

Discuss
Answer: (c).The insured's financial needs and responsibilities of the beneficiaries Explanation:The needs analysis method attempts to arrive at future financial needs of the beneficiaries and then translates this into the death benefit amount. This method is generally based on financial needs and responsibilities of the individual.
Q36.
What approach can be adopted to arrive at the insurance cover for non-working women?

a.

Need analysis approach

b.

Human life value method

c.

Income multiple method

d.

Expense substitution method

Discuss
Answer: (a).Need analysis approach Explanation:The need analysis approach can be adopted to arrive at the insurance cover for non-working women.
Q37.
What is the recommended approach when granting small sums assured to non-working women?

a.

Equal cover on the husband's life

b.

Consideration of educational background of husband

c.

Consideration of age

d.

None of the above

Discuss
Answer: (a).Equal cover on the husband's life Explanation:Generally, small sums assured are granted if there is an equal cover on the husband's life.
Q38.
What needs to be considered when granting moderate or large covers to non-working women?

a.

Educational background

b.

Insurance on other family members

c.

Marital status and the nominee

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Special consideration needs to be given to the overall profile of the life to be insured, which can comprise of the factors mentioned.
Q39.
What is important to understand when granting insurance to non-working women?

a.

Who the beneficiary of the insurance policy is

b.

The nature of plan requested for

c.

Trends related to social or cultural aspects and trends related to the claims experience

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Various factors, including the beneficiary of the insurance policy, the nature of the plan requested for, and trends related to social or cultural aspects and trends related to the claims experience, should be understood when granting insurance to non-working women.
Q40.
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.
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