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.
Who should have an insurable interest in the life of the insured?

a.

Policy beneficiary

b.

Insurance agent

c.

Insurance company

d.

None of the above

Discuss
Answer: (a).Policy beneficiary Explanation:Policy beneficiary should have an insurable interest in the life of the insured.
Q82.
According to common law, who has insurable interest in a person's life?

a.

The person himself/herself

b.

The person's spouse, children, parents, and assets

c.

The insurance company

d.

None of the above

Discuss
Answer: (b).The person's spouse, children, parents, and assets Explanation:According to common law, a person has insurable interest in his own life, spouse's life, children's life, parent's life, and his assets.
Q83.
Who has insurable interest in the life of employees in a company?

a.

The employees themselves

b.

The company

c.

The insurance company

d.

The policy beneficiary

Discuss
Answer: (b).The company Explanation:An employer has insurable interest in the life of the employees; the company has insurable interest in the life of the keyman, and partners have insurable interest in each other's lives.
Q84.
What is the human life value method of calculating insurance cover?

a.

Takes into account the present value of the future earning potential of an individual

b.

Takes into account the value of financial liabilities and responsibilities of an individual

c.

Takes into account the age and income of the individual

d.

None of the above

Discuss
Answer: (a).Takes into account the present value of the future earning potential of an individual Explanation:The human life value method of calculating insurance cover takes into account the present value of the future earning potential of an individual.
Q85.
What is the needs analysis method of calculating insurance cover?

a.

Takes into account the present value of the future earning potential of an individual

b.

Takes into account the value of financial liabilities and responsibilities of an individual

c.

Takes into account the age and income of the individual

d.

None of the above

Discuss
Answer: (b).Takes into account the value of financial liabilities and responsibilities of an individual Explanation:The needs analysis method of calculating insurance takes into account the value of financial liabilities and responsibilities of an individual.
Q86.
What is the income multiple method of calculating insurance cover?

a.

Takes into account the present value of the future earning potential of an individual

b.

Takes into account the value of financial liabilities and responsibilities of an individual

c.

Takes into account the age and income of the individual

d.

None of the above

Discuss
Answer: (c).Takes into account the age and income of the individual Explanation:The income multiple method of calculating insurance takes into account the age and income of the individual.
Q87.
What is the predominant reason to purchase life insurance on the life of a key person?

a.

To provide financial support to the key person's family

b.

To provide financial support to the policy beneficiary

c.

To indemnify the company against the loss of the key person whose skills and contribution is critical to the company

d.

None of the above

Discuss
Answer: (c).To indemnify the company against the loss of the key person whose skills and contribution is critical to the company Explanation:A predominant reason 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 is critical to the company.
Q88.
What are the objectives of financial underwriting?

a.

To minimize fraudulent claims, minimize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium

b.

To maximize fraudulent claims, maximize adverse claims experience due to anti-selection, and maximize the early lapse and surrender due to the insured not being able to pay the premium

c.

To minimize fraudulent claims, maximize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium

d.

To maximize fraudulent claims, minimize adverse claims experience due to anti-selection, and maximize the early lapse and surrender due to the insured not being able to pay the premium

Discuss
Answer: (a).To minimize fraudulent claims, minimize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium Explanation:The objectives of financial underwriting are to minimize fraudulent claims, minimize adverse claims experience due to anti-selection, and minimize the early lapse and surrender due to the insured not being able to pay the premium.
Q89.
What are a few examples of valid insurable interest?

a.

Self, spouse, children, assets

b.

Self, spouse, pets, assets

c.

Self, parents, children, assets

d.

Self, spouse, children, liabilities

Discuss
Answer: (a).Self, spouse, children, assets Explanation:Some examples of valid insurable interest are self, spouse, children, and assets.
Q90.
What is the concept of insurable interest in life insurance?

a.

The beneficiary must have a financial interest in the continued existence of the insured

b.

The sum assured must not exceed the quantified value of the financial need

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Insurable interest means that the beneficiary under the policy should have a financial interest in the continued existence of the insured and would suffer significant financial loss in the event of death of the insured. Also, the sum assured must not exceed the quantified value of that financial need.
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