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.
Who has insurable interest in the life of an employee?

a.

The other employees

b.

The employer

c.

Both the other employees and the employer

d.

None of the above

Discuss
Answer: (b).The employer Explanation:An employer has insurable interest in the life of their employee to the extent of the value of their services.
Q32.
Can a company take key-man insurance on the lives of any employees?

a.

Yes, on the lives of any employees

b.

No, only on the lives of employees who have special skills and whose absence can affect the company adversely

c.

Only on the lives of employees who are over 50 years old

d.

None of the above

Discuss
Answer: (b).No, only on the lives of employees who have special skills and whose absence can affect the company adversely Explanation:A company can take key-man insurance on the lives of certain "key" people, whose absence can affect the company adversely. These are key people and the insurance amount for such policies can be to the extent of any liability or reduction in profit resulting from the loss of special skills of the key-person.
Q33.
Do children buying insurance cover for their parents fall under insurable interest?

a.

Yes

b.

No

c.

Only for pension plans

d.

None of the above

Discuss
Answer: (b).No Explanation:Children buying insurance cover (except pension plans) for their parents are not allowed and this is taken as a moral hazard.
Q34.
Who has insurable interest in the property mortgaged against a loan granted by a bank?

a.

The borrower

b.

The bank

c.

Both the borrower and the bank

d.

None of the above

Discuss
Answer: (b).The bank Explanation:A bank has insurable interest in the property mortgaged against the loan granted by the bank to a borrower.
Q35.
What is key-man insurance?

a.

Insurance taken by an employee on the life of his employer

b.

Insurance taken by a company on the life of its key people

c.

Insurance taken by a partner on the life of another partner

d.

Insurance taken by a creditor on the life of the debtor

Discuss
Answer: (b).Insurance taken by a company on the life of its key people Explanation:Key-man insurance is insurance taken by a company on the life of its key people, whose absence can affect the company adversely.
Q36.
Who has insurable interest in the lives of each other in a partnership?

a.

Creditors

b.

Partners

c.

Key persons

d.

Employers

Discuss
Answer: (b).Partners Explanation:Partners have insurable interest in the lives of each other. The death of any of the partner/s can affect the firm adversely.
Q37.
When does lack of insurable interest exist?

a.

When the beneficiaries are neighbours, casual acquaintances, friends etc.

b.

When the beneficiary has a contractual obligation towards the insured

c.

When the insured has no financial loss or obligations created by his death

d.

When the amount of coverage necessary to replace the financial loss by the beneficiary is lower than the insurance coverage

Discuss
Answer: (a).When the beneficiaries are neighbours, casual acquaintances, friends etc. Explanation:Lack of insurable interest exists when the beneficiaries are neighbours, casual acquaintances, friends etc.
Q38.
What is the definition of insurable value?

a.

The measure of financial loss and obligations created by the beneficiary's death

b.

The maximum amount of the death benefit which can be acceptable

c.

The extent of insurable interest in the life of the insured

d.

The amount necessary to replace the financial loss by the beneficiary

Discuss
Answer: (b).The maximum amount of the death benefit which can be acceptable Explanation:Insurable value as the measure of financial loss and obligations created by the insured's death, which determines the maximum amount of the death benefit which can be acceptable.
Q39.
What is the consequence of ignoring the insurable interest and the insurable value limits?

a.

Payment of unnecessary coverage

b.

Legal consequences leading to the policy contract being void

c.

Excess coverage serving as an incentive for fraudulent claims

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Ignoring the insurable interest and the insurable value limits can result in payment of unnecessary coverage, legal consequences leading to the policy contract being void, and excess coverage serving as an incentive for fraudulent claims.
Q40.
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.
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