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 6 of 13

Discover more Topics under IC22 Life Insurance Underwriting

Q51.
What is the importance of considering the health status and cover of siblings and parents while insuring the life of a child?

a.

To increase the sum assured for the child

b.

To minimise moral hazard

c.

To reduce the premium amount

d.

None of the above

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.
Q52.
What is the main purpose of child insurance plans?

a.

To secure the financial future of parents

b.

To provide periodic payments at specific intervals

c.

To offer financial security for the children's future

d.

None of the above

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.
Q53.
What is the 'waiver of premium' built-in rider in most child plans?

a.

A rider that provides additional coverage for the child

b.

A rider that allows the policyholder to skip premium payments

c.

A rider that makes sure the plan continues in case of the parent's untimely death

d.

None of the above

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.
Q54.
What is the primary reason for a company to purchase life insurance on the life of a key person?

a.

To indemnify the company against the loss of the key person

b.

To provide financial assistance to the family of the key person

c.

To increase the revenue of the company

d.

None of the above

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.
Q55.
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.
Q56.
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.
Q57.
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.
Q58.
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.
Q59.
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.
Q60.
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.
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