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 9 of 13

Discover more Topics under IC22 Life Insurance Underwriting

Q81.
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).
Q82.
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.
Q83.
What is the needs analysis method of arriving at the insurance cover amount?

a.

It is a method that quantifies the estimated potential earnings of the insured.

b.

It is a method that takes into account the future financial needs of the beneficiaries and translates this into the death benefit amount.

c.

It is a method that assesses the value of the insured's assets and liabilities.

d.

It is a method that evaluates the risk factors associated with insuring the life of the insured.

Discuss
Answer: (b).It is a method that takes into account the future financial needs of the beneficiaries and translates this into the death benefit amount. Explanation:The needs analysis method attempts to arrive at the insurance cover amount by taking into account the future financial needs of the beneficiaries and then translating this into the death benefit amount. This method is generally based on factors such as providing benefit in the period immediately following the death of the insured to offset additional expenses, supporting the normal living expenses of the dependents, providing long term income for the retired surviving spouse, and taking into account the financial liabilities and financial responsibilities of the individual.
Q84.
In the needs analysis method, what financial responsibilities of the insured are taken into account?

a.

Children's education and marriage expenses

b.

Retirement expenses

c.

Home loan and other loans

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The needs analysis method takes into account the financial responsibilities of the insured, such as children's education and marriage expenses, retirement expenses, home loan and other loans, and other factors that may affect the financial needs of the beneficiaries.
Q85.
What are the assumptions considered while using the needs analysis method to arrive at the insurance cover amount?

a.

It provides benefit in the period immediately following the death of the insured to offset additional expenses, it supports the normal living expenses of the dependents, it provides long term income for the retired surviving spouse, it takes into account the financial liabilities and financial responsibilities of the individual.

b.

It provides benefit in the period immediately preceding the death of the insured to offset additional expenses, it supports the extraordinary living expenses of the dependents, it provides long term income for the retired surviving spouse, it takes into account the financial assets and financial responsibilities of the individual.

c.

It provides benefit in the period immediately following the death of the insured to offset additional expenses, it supports the normal living expenses of the dependents, it provides short term income for the retired surviving spouse, it takes into account the financial liabilities and financial assets of the individual.

d.

It assumes that the insured has no financial liabilities or responsibilities.

Discuss
Answer: (a).It provides benefit in the period immediately following the death of the insured to offset additional expenses, it supports the normal living expenses of the dependents, it provides long term income for the retired surviving spouse, it takes into account the financial liabilities and financial responsibilities of the individual. Explanation:The needs analysis method attempts to arrive at future financial needs of the beneficiaries and then translates this into the death benefit amount. The method is based on several assumptions, including providing benefit in the period immediately following the death of the insured to offset additional expenses, supporting the normal living expenses of the dependents, providing long-term income for the retired surviving spouse, and taking into account the financial liabilities and financial responsibilities of the individual.
Q86.
What is the provision of Section 6 of the MWP Act?

a.

A policy effected by any married man on his own life for the benefit of his wife or children shall be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (husband), or to his creditors.

b.

A policy effected by any married woman on her own life for the benefit of her husband or children shall be deemed to be a trust for the benefit of her husband, or of her husband and children, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (wife), or to her creditors.

c.

A policy effected by any married man on his own life for the benefit of his wife or children shall be deemed to be a trust for the benefit of his extended family, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (husband), or to his creditors.

d.

A policy effected by any married woman on her own life for the benefit of her extended family shall be deemed to be a trust for the benefit of her extended family, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (wife), or to her creditors.

Discuss
Answer: (a).A policy effected by any married man on his own life for the benefit of his wife or children shall be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (husband), or to his creditors. Explanation:Section 6 of the MWP Act provides that a policy effected by any married man on his own life for the benefit of his wife or children shall be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interest so expressed, and shall not be subject to the control of the life assured (husband), or to his creditors.
Q87.
Who can be the beneficiary under the MWP Act?

a.

The husband alone

b.

The wife and one or more children jointly

c.

One or more children (both natural and adopted)

d.

All of the above

Discuss
Answer: (c).One or more children (both natural and adopted) Explanation:Under the MWP Act, the beneficiary can be the wife alone, one or more children (both natural and adopted), or the wife and one or more children jointly.
Q88.
Can the beneficiaries of policies taken under the MWP Act be changed by the proposer at any time?

a.

Yes

b.

No

c.

Depends on Insurer

d.

None of the above

Discuss
Answer: (b).No Explanation:The beneficiaries of policies taken under the MWP Act once declared cannot be changed at any time by the proposer.
Q89.
Who can claim the benefits of policies taken under the MWP Act?

a.

The legal heirs of the life assured

b.

The creditors of the life assured

c.

The employer of the life assured

d.

None of the above

Discuss
Answer: (d).None of the above Explanation:The policies taken under the MWP Act cannot be claimed by the other legal heirs or the husband's creditors, nor can the husband claim any benefit. The beneficiaries declared at the time of policy issuance are the only ones entitled to the benefits.
Q90.
What is the difference in beneficiary specification for Mohammedan and Non-Mohammedan proposers under the MWP Act?

a.

Non-Mohammedan proposers can only take up named policies, while Mohammedan proposers can specify the beneficiaries as a class or as a named policy.

b.

Mohammedan proposers can only take up named policies, while Non-Mohammedan proposers can specify the beneficiaries as a class or as a named policy.

c.

Both Mohammedan and Non-Mohammedan proposers can specify the beneficiaries as a class or as a named policy.

d.

Neither Mohammedan nor Non-Mohammedan proposers can specify the beneficiaries as a class or as a named policy.

Discuss
Answer: (b).Mohammedan proposers can only take up named policies, while Non-Mohammedan proposers can specify the beneficiaries as a class or as a named policy. Explanation:Non-Mohammedan proposers can specify the beneficiaries as a class or as a named policy and provide that the benefit should go to them jointly or to the survivors according to the specified percentages. However, Mohammedan proposers can only take up named policies.
Page 9 of 13