L04 Life insurance products Non Traditional MCQs

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

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Q41.
Who bears the investment risk in ULIPs?

a.

The insurance company

b.

The policyholder/unit holder

c.

The beneficiary

d.

The government

Discuss
Answer: (b).The policyholder/unit holder Explanation:In ULIPs, the investment risk is borne by the policyholder or unit holder, as the value of the units depends on the insurer's investments, which are not guaranteed.
Q42.
What was a critical concern with traditional life insurance policies?

a.

Unbundling of pricing factors

b.

Transparency in pricing

c.

Competitive rate of return compared to other financial assets

d.

Investment linkage

Discuss
Answer: (c).Competitive rate of return compared to other financial assets Explanation:The concern of traditional life insurance policies not providing a competitive rate of return compared to other financial assets.
Q43.
Which of the following trends contributed to the rise of non-traditional life insurance products?

a.

Unbundling, investment linkage, and transparency

b.

Fixed premiums and fixed face amounts

c.

Lack of flexibility in death benefits

d.

Traditional pricing factors

Discuss
Answer: (a).Unbundling, investment linkage, and transparency Explanation:The non-traditional life insurance products gained popularity due to trends such as unbundling, investment linkage, and transparency.
Q44.
What characterizes Universal Life Insurance?

a.

Fixed premiums and face amounts

b.

Unbundling of pricing factors

c.

Fixed death benefit amounts

d.

Inflexible premiums

Discuss
Answer: (b).Unbundling of pricing factors Explanation:Universal Life Insurance is characterized by its flexible premiums, flexible face amount, death benefit amounts, and the unbundling of pricing factors.
Q45.
In which markets did ULIPs become one of the most popular and significant products?

a.

Emerging markets

b.

Traditional markets only

c.

Replaced traditional plans in all markets

d.

Many markets

Discuss
Answer: (d).Many markets Explanation:ULIPs became popular and significant products, replacing traditional plans in many markets.
Q46.
How do ULIPs allow policyholders to benefit from a Life Insurer's investment performance?

a.

By offering fixed death benefits

b.

By guaranteeing investment returns

c.

By directly and immediately cashing in on investment performance

d.

By offering transparency in pricing

Discuss
Answer: (c).By directly and immediately cashing in on investment performance Explanation:ULIPs provide the means for policyholders to directly and immediately cash in on the benefits of a Life Insurer's investment performance.
Q47.
Which of the following statements is/ are incorrect?

a.

Variable life insurance is a temporary life insurance policy

b.

Variable life insurance is a permanent life insurance policy

c.

The policy has a cash value account

d.

The policy provides a minimum death benefit guarantee

Discuss
Answer: (a).Variable life insurance is a temporary life insurance policy Explanation:This statement is incorrect. Variable life insurance is not a temporary policy; it is a permanent life insurance policy. It provides coverage for the entire lifetime of the insured.
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