L06 Pricing and Valuation in Life Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on L06 Pricing and Valuation in Life Insurance, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our L06 Pricing and Valuation in Life Insurance 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 L06 Pricing and Valuation in Life Insurance mcq questions that explore various aspects of L06 Pricing and Valuation in Life Insurance problems. Each MCQ is crafted to challenge your understanding of L06 Pricing and Valuation in Life Insurance principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our L06 Pricing and Valuation in Life Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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L06 Pricing and Valuation in Life Insurance MCQs | Page 1 of 6

Discover more Topics under IC38 Life Insurance Agent Exam

Q1.
What does the term "premium" refer to in the context of insurance?

a.

The age of the insured person

b.

The total sum assured in an insurance policy

c.

The price paid by an insured for purchasing an insurance policy

d.

The annual return on investment in an insurance policy

Discuss
Answer: (c).The price paid by an insured for purchasing an insurance policy Explanation:In the context of insurance, the term "premium" refers to the price paid by an insured for purchasing an insurance policy.
Q2.
How is a premium typically expressed in insurance?

a.

As the age of the insured

b.

As a percentage of the total sum assured

c.

As an annual rate per thousand rupees of sum assured

d.

As a one-time payment at the beginning of the contract

Discuss
Answer: (c).As an annual rate per thousand rupees of sum assured Explanation:Premiums in insurance are typically expressed as an annual rate per thousand rupees of the sum assured.
Q3.
What factors influence the premium rates in insurance?

a.

The total number of policies sold by the insurance company

b.

The age of the prospect and the plan chosen

c.

The geographical location of the policyholder

d.

The type of medical coverage included in the policy

Discuss
Answer: (b).The age of the prospect and the plan chosen Explanation:Premium rates in insurance are influenced by factors such as the age of the prospect and the specific insurance plan chosen.
Q4.
What are "Office Premiums" in insurance?

a.

Premiums payable only in the first few years of the policy

b.

Premiums expressed as a percentage of the sum assured

c.

Premiums that can only be paid annually

d.

Premium rates available in tables provided by insurance companies

Discuss
Answer: (d).Premium rates available in tables provided by insurance companies Explanation:"Office Premiums" in insurance refer to premium rates available in tables provided by insurance companies.
Q5.
What does it mean when a policy has a single premium contract?

a.

The premium is paid annually for the entire policy term

b.

Only one premium is payable at the beginning of the contract

c.

The policy has no premium requirements

d.

The premium can be paid at any time during the policy term

Discuss
Answer: (b).Only one premium is payable at the beginning of the contract Explanation:A single premium contract in insurance means that only one premium is payable at the beginning of the contract.
Q6.
What are the two types of rebates that life insurance companies may offer on premiums?

a.

Age-based rebates and location-based rebates

b.

Sum assured rebates and policy duration rebates

c.

Sum assured rebates and mode of premium rebates

d.

Monthly premium rebates and annual premium rebates

Discuss
Answer: (c).Sum assured rebates and mode of premium rebates Explanation:Life insurance companies may offer rebates for the sum assured and the mode of premium.
Q7.
What are the two types of rebates that life insurance companies may offer on premiums?What does a "sum assured rebate" in life insurance typically refer to?

a.

Age-based rebates and location-based rebatesA discount on the premium based on the insured person's age

b.

Sum assured rebates and policy duration rebatesA reduction in the total sum assured in the insurance policy

c.

Sum assured rebates and mode of premium rebatesA discount on the premium based on the chosen sum assured amount

d.

Monthly premium rebates and annual premium rebatesA rebate for policies with a specific duration

Discuss
Answer: (c).Sum assured rebates and mode of premium rebatesA discount on the premium based on the chosen sum assured amount Explanation:Life insurance companies may offer rebates for the sum assured and the mode of premium.A "sum assured rebate" in life insurance typically refers to a discount on the premium based on the chosen sum assured amount.
Q8.
What does a "mode of premium rebate" in life insurance typically refer to?

a.

A discount for paying premiums on a monthly basis

b.

A reduction in the total premium amount

c.

A discount for paying premiums on an annual basis

d.

A rebate for policies with a specific duration

Discuss
Answer: (a).A discount for paying premiums on a monthly basis Explanation:A "mode of premium rebate" in life insurance typically refers to a discount for paying premiums on a specific mode, such as monthly, quarterly, or annually.
Q9.
What is the rationale behind offering a "rebate for sum assured" in life insurance?

a.

To encourage customers to buy lower sum assured policies

b.

To pass on the gains made by the insurer when servicing higher value policies

c.

To increase the cost of processing higher sum assured policies

d.

To limit the number of policies with higher sum assured amounts

Discuss
Answer: (b).To pass on the gains made by the insurer when servicing higher value policies Explanation:A "rebate for sum assured" is offered to pass on the gains that the insurer may make when servicing higher value policies.
Q10.
Why might life insurance companies encourage customers to pay premiums on an annual or half-yearly basis by offering a rebate for the mode of premium?

a.

To discourage customers from paying premiums regularly

b.

To increase the administrative costs for collecting premiums

c.

To earn interest on the premium amount throughout the year

d.

To charge extra fees for annual premium payments

Discuss
Answer: (c).To earn interest on the premium amount throughout the year Explanation:Life insurance companies encourage annual or half-yearly premium payments to earn interest on the premium amount throughout the year.
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