L04 Life insurance products Non Traditional MCQs

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L04 Life insurance products Non Traditional MCQs | Page 3 of 5

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Q21.
How is the value of units typically defined in Unit Linked Insurance?

a.

Assumptions made by the life insurance company

b.

A formula outlined in advance, often based on market assets

c.

The policyholder's choice of funds

d.

Government bonds and fixed deposits

Discuss
Answer: (b).A formula outlined in advance, often based on market assets Explanation:The value of units in Unit Linked Insurance is typically determined by a formula, such as Net Asset Value (NAV), based on the market value of the fund's assets.
Q22.
What does the Net Asset Value (NAV) formula represent in Unit Linked Insurance?

a.

Policyholder benefits

b.

Market value of assets divided by the number of units

c.

Assumptions made by the life insurance company

d.

Choice of funds available to policyholders

Discuss
Answer: (b).Market value of assets divided by the number of units Explanation:The Net Asset Value (NAV) formula represents the market value of assets divided by the number of units in the fund.
Q23.
How do Unit Linked policies differ from traditional insurance policies in terms of policyholder benefits?

a.

They depend on assumptions of the insurance company

b.

They are not based on any formula

c.

They depend on the choice of funds and market asset values

d.

They offer fixed benefits

Discuss
Answer: (c).They depend on the choice of funds and market asset values Explanation:Policyholder benefits in Unit Linked policies depend on the choice of funds and market asset values, rather than the assumptions of the insurance company.
Q24.
In Unit Linked Insurance, what can policyholders choose between?

a.

Assumptions made by the insurance company

b.

Fixed deposit options

c.

Different types of funds

d.

Government bonds only

Discuss
Answer: (c).Different types of funds Explanation:Policyholders in Unit Linked Insurance can choose between different kinds of funds, each with a different portfolio mix.
Q25.
Which fund primarily invests in equity and equity-related instruments?

a.

Debt Fund

b.

Balanced Fund

c.

Money Market Fund

d.

Equity Fund

Discuss
Answer: (d).Equity Fund Explanation:The Equity Fund in Unit Linked Insurance primarily invests in equity and equity-related instruments.
Q26.
How is the value of units in Unit Linked Insurance typically defined?

a.

Based on the policyholder's assumptions

b.

Determined by the life insurance company

c.

Outlined in advance using the Net Asset Value (NAV)

d.

Subject to market volatility

Discuss
Answer: (c).Outlined in advance using the Net Asset Value (NAV) Explanation:The value of units in Unit Linked Insurance is typically defined by the Net Asset Value (NAV), which is outlined in advance.
Q27.
What does the Net Asset Value (NAV) in Unit Linked Insurance reflect?

a.

The policyholder's preferences

b.

The market value of the fund's assets

c.

The insurer's assumptions

d.

The premium payments made by the policyholder

Discuss
Answer: (b).The market value of the fund's assets Explanation:The Net Asset Value (NAV) in Unit Linked Insurance reflects the market value of the assets in which the fund is invested.
Q28.
Why do policyholder benefits in Unit Linked Insurance not depend on the assumptions of the life insurance company?

a.

Because benefits are determined by the investor's choices

b.

Because benefits are tied to market value

c.

Because benefits are fixed and cannot change

d.

Because benefits are linked to the life insurance company's assumptions

Discuss
Answer: (b).Because benefits are tied to market value Explanation:Policyholder benefits in Unit Linked Insurance are tied to the market value of the fund's assets, not the assumptions of the life insurance company.
Q29.
What do Unit Linked policies allow policyholders to choose between?

a.

Different premium payment options

b.

Different types of insurance coverage

c.

Different kinds of investment funds

d.

Different policy terms

Discuss
Answer: (c).Different kinds of investment funds Explanation:Unit Linked policies allow policyholders to choose between different kinds of investment funds.
Q30.
Which type of fund primarily invests in equity and equity-related instruments?

a.

Debt Fund

b.

Balanced Fund

c.

Money Market Fund

d.

Equity Fund

Discuss
Answer: (d).Equity Fund Explanation:The Equity Fund primarily invests in equity and equity-related instruments.
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