1. Which one of the following statements is correct?
- The premium is the price paid by the policyholder to secure insurance
- The amount of premium varies according to the insurance plan
- Both the above statements are correct *
- Both the above statements are wrong
2. Which one of the following statements is correct?
- The premium under a life insurance policy may be paid monthly
- The premium under a life insurance policy may be paid annually
- Both the above statements are correct *
- Both the above statements are wrong
3. Which one of the following statements is correct?
- The sum of all the premiums paid will be equal to the Sum Assured
- The sum of all the premiums paid will be more than the Sum Assured
- Both the above statements are correct
- Both the above statements are wrong *
4. Which one of the following statements is correct?
- The sum of all the premiums paid will be more than the Sum Assured
- The sum of all the premiums paid will be less than the Sum Assured
- Both the above statements are wrong *
- Both the above statements are correct
5. Which one of the following statements is correct?
- The annual premium must be twelve times the monthly premium
- The annual premium may be less than twelve times the monthly premium *
- Both the above statements are wrong
- Both the above statements are correct
6. Which of the following statements is correct?
- The annual premium is equal to the SA divided by the term of the policy
- The annual premium increases as the term of the policy increases
- Both the above statements are correct
- Both the above statements are wrong *
7. Which one of the following statements is correct?
- The annual premium for a long term policy is more than for a short term policy
- The annual premium for a long term policy is less than for a short term policy *
- Both the above statements are wrong
- Both the above statements are correct
8. Which one of the following statements is correct?
- The premium increases as age of the insured person increases *
- The premium decreases as the age of the insured person increases
- The premium is the same whatever be the age of the person
- The premium is the same for a person aged 30 for all plans of insurance
9. Which one of the following statements is incorrect?
- The premium depends on the age of the policyholder *
- The premium depends on the age of the insured person
- The premium depends on the health of the insured person
- The premium depends on the occupation of the insured person
10. What does a premium depend upon?
- Age of the person to be insured
- Family history of the person to be insured
- Medical history of the person to be insured
- All of the above *
11. What does a premium depend upon?
- Religion of the person to be insured
- Income of the person to be insured
- Both the religion and the income of the person to be insured
- Neither the religion nor the income of the person to be insured *
12. The premium actually paid by the policyholder depends upon
- The wealth of the person to be insured
- The level of risk as assessed by the insurerr *
- The tables of rates printed by the insurer
- None of the above
13. What does a premium depend upon?
- The place of worship visited by the person to be insured
- The state of health of the policyholder
- The decision of the underwriter *
- The report of the agent
14. Which one of the following statements is correct?
- The rate of premium charged can be less than the tabular rates
- The rate of premium can be more than the tabular rates *
- Both the above statements are correct
- Both the above statements are wrong
15. Which one of the following statements is correct?
- The premium collected in the early years is less than what is required
- The premium collected in the early years is more than what is required *
- The premium collected in any year is exactly what is required
- All the above statements are correct
16. The pure premium will be
- Less than the office premium *
- More than the office premium
- Either more or less than the office premium
- Neither more nor less than the office premium
17. The net premium will be
- Less than the risk premium *
- More than the risk premium
- Calculated by adding expenses to the risk premium
- More than the pure premium
18. When interest rates fall, the premium charged by an insurer are likely to
- Increase *
- Decrease
- Remain the same
- Neither increase or decrease
19. The premium is loaded because of
- Interest likely to be earned
- Likely expenses *
- Likely claims
- Age of the insured person
20. The policyholder is concerned with the
- Office premium *
- Pure premium
- Net premium
- Risk premium
21. The premium rates printed in the promotional literature are
- Risk premiums
- Net premiums
- Office premiums *
- None of the above
22. The premium printed on the schedule of the policy is worked out from
- Net premiums
- Risk premiums
- Office premiums *
- None of the above
23. The reason for charging level premiums is
- Risk increases as age increases
- It is convenient to the policyholder
- It is convenient to the insurer
- All the above reasons *
24. The practice of charging level premiums
- Makes it convenient to the policyholder
- Reduces the likelihood of lapses
- Adds to the reserves of the insurer
- Has all the above benefits *
25. The practice of charging level premiums has the benefit of
- Making it easy for the policyholder to maintain the insurance cover *
- Increasing the returns to the policyholder
- Helping the agent in his sales effort
- All the above
26. Adjustments are made to the tabular premiums because of
- The health of the person insured
- The frequency of premium payment
- The occupation of the person insured
- All of the above *
27. Which one of the following statements is correct?
- All insurers charge same premium rates.
- Premium rates are determined by the IRDA
- Premium rates are determined by the Actuaries of insurers *
- All of the above statements are correct
28. Which one of the following statements is correct?
- The age next birthday is always higher than the age nearest birthday
- The age next birthday may be sometimes less than the age nearest birthday
- Both the above statements are correct
- Both the above statements are wrong *
29. Which one of the following statements is correct?
- The premium calculated on mortality alone is called risk premium
- Insurers collect premium in advance
- Both the statements are correct *
- Both the statements are wrong
30. Which one of the following statements is correct?
- The age last birthday can never be the same as the age nearest birthday
- The age last birthday is always less than the age next birthday *
- Both the above statements are correct
- Both the above statements are wrong
31. Which one of the following statements is correct?
- The age nearest birthday is always less than the age next birthday
- The age nearest birthday is always more than the age last birthday
- Both the above statements are correct
- Both the above statements are wrong. *
32. In life insurance, profit is determined by
- the accountant who prepares the balance sheet
- the actuary who makes a valuation *
- the auditor who certifies the annual accounts
- none of the above three persons
33. In the business of life insurance, valuation means
- an actuarial exercise to determine adequacy of funds *
- an attempt to determine the correctness of the values of assets
- estimating the values of immovable property
- all of the above
34. The addition to the life fund in a year represents
- the profits made by the insurer in that year
- the moneys set aside by the insurer for the policyholders *
- the extra premium charged by the insurer to its policyholders
- all of the above
35. The addition to the life fund arises because of the
- loading in the premium for bonus
- the practice of charging level premiums *
- not having paid the claims on time
- all the above reasons
36. A valuation is done by a life insurer because
- it is a statutory requirement
- it is necessary to be able to declare dividends to shareholders
- it tells the insurer how well it is managing the business
- all of the above *
37. The surplus in the life fund represents
- the profits of the business
- the excess premium collected by the insurer
- the dues to the shareholders
- none of the above *
38. The surplus disclosed in a valuation means
- that the interests of the policyholders are safe
- that the funds of the insurer are adequate to meet its liabilities
- that the business is being managed well
- all of the above *
39. Which one of the following statements is correct?
- The life fund belongs to the policyholders *
- The life fund belongs to the shareholders
- Both the statements above are correct
- Both the statements above are wrong
40. Which one of the following statements is correct?
- In a valuation, the actuary calculates the fund that the insurer must have
- In a valuation, the actuary calculates what the liability of the insurer is
- Both the statements above are correct *
- Both the statements above are wrong.
41. Which one of the following statements is correct?
- Bonus is declared out of the surplus declared by the actuary *
- The Sum Assured is automatically increased when a bonus is declared
- All bonuses are reversionary bonuses
- All the statements above are correct
42. Which one of the following statements is correct?
- The bonus declared is uniformly applicable to all plans of insurance
- Bonus may vary between plans *
- Both the statements above are correct
- Both the statements above are wrong
43. The minimum percentage of the surplus to be set aside for policyholders is
- Ninety five
- Ninety *
- Eightyfive
- Nil (There is no minimum)
44. For what period is an interim bonus valid?
- For as long as the policy is in force
- Till the next declaration of bonus *
- Till the next valuation date
- As long as the management wants it to be
45. Which one of the following statements is correct?
- Bonus is paid along with the survival benefit in a Money Back policy
- Bonus is paid when the Money Back policy matures *
- Both the statements above are wrong
- Both the statements above are correct.
46. A bonus becomes possible because
- Actual experience is better than expectations
- The assumptions made in constructing the premium were conservative
- There is a loading for bonus in the premium
- Of all the above reasons *
47. What does a surplus in the life fund signify?
- That the premium rates must be revised downwards
- That the premium rates are appropriate
- That the company is too miserly in expenditure
- None of the above three *
48. When a certain level of bonus is declared, what does it mean?
- That this level will be maintained in future years
- That it is the return on ones’ investment, viz., premium
- Both the above meanings can be made
- Both the above meanings will be wrong *
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