Solved - LIFE INSURANCE PRODUCTS

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LIFE INSURANCE PRODUCTS 


Question 1
What does inter-temporal allocation of resources refer to?
I. Postponing allocation of resources until the time is right
II. Allocation of resources over time
III. Temporary allocation of resources
IV. Diversification of resource allocation
Answer : II. Allocation of resources over time

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Question 2
Which among the following is a limitation of traditional life insurance products?
I. Yields on these policies is high
II. Clear and visible method of arriving at surrender value
III. Well defined cash and savings value component
IV. Rate of return is not easy to ascertain
Answer: IV. Rate of return is not easy to ascertain

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Question 3
Where was the Universal Life Policy introduced first?
I. USA
II. Great Britain
III. Germany
IV. France
Answer : I. USA

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Question 4
Who among the following is most likely to buy variable life insurance?
I. People seeking fixed return
II. People who are risk averse and do not dabble in equity
III. Knowledgeable people comfortable with equity
IV. Young people in general
Answer: III. Knowledgeable people comfortable with equity

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Question 5
Which of the below statement is true regarding ULIP’s?
I. Value of the units is determined by a formula fixed in advance
II. Investment risk is borne by the insurer
III. ULIP’s are opaque with regards to their term, expenses and savings
components
IV. ULIP’s are bundled products
Answer: III. ULIP’s are opaque with regards to their term, expenses and savings

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Question 6
All of the following are characteristics of variable life insurance EXCEPT:
I. Flexible premium payments
II. Cash value is not guaranteed
III. Policy owner selects where savings reserve is invested
IV. Minimum Death benefit is guaranteed
Answer: I. Flexible premium payments

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Question 7
Which of the below is correct with regards to universal life insurance?
Statement I: It allows policy owner to vary payments
Statement II: Policy owner can earn market-based rate of return on cash value
I. I is true
II. II is true
III. I and II are true
IV. I and II are false
Answer : III. I and II are true

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Question 8
All of the following is true regarding ULIP’s EXCEPT:
I. Unit holder can choose between different kind of funds
II. Life insurer provides guarantee for unit values
III. Units may be purchased by payment of a single premium or via regular
premium payments.
IV. ULIP policy structure is transparent with regards to the insurance expenses
Component
Answer : II. Life insurer provides guarantee for unit values

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Question 9
As per IRDA norms, an insurance company can provide which of the below nontraditional
savings life insurance products are permitted in India?
Choice I: Unit Linked Insurance Plans
Choice II: Variable Insurance Plans
I. I only
II. II only
III. I and II both
IV. Neither I nor II
Answer:  III. I and II both

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Question 10
What does unbundling of life insurance products refers to?
I. Correlation of life insurance products with bonds
II. Correlation of life insurance products with equities
III. Amalgamation of protection and savings element
IV. Separation of the protection and savings element
Answer : IV. Separation of the protection and savings element

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Question 11
 Which among the following is a non-traditional life insurance product?
I. Term assurance
II. Universal life insurance
III. Endowment insurance
IV. Whole life insurance
Answer : II. Universal life insurance

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Question 12
Which of the below statement is incorrect?
I. Variable life insurance is a temporary life insurance policy
II. Variable life insurance is a permanent life insurance policy
III. The policy has a cash value account
IV. The policy provides a minimum death benefit guarantee

Answer : I. Variable life insurance is a temporary life insurance policy

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Solved -LIFE INSURANCE PRODUCTS

LIFE INSURANCE PRODUCTS – I

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(1) ___________ life insurance pays off a policyholder's mortgage in the event of
the person's death.
I. Term
II. Mortgage
III. Whole
IV. Endowment
Answer: II. Mortgage

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(2) The ________ premium paid by you towards your life insurance, the
________ will be the compensation paid to the beneficiary in the event of your
death.
I. Higher, Higher
II. Lower, Higher
III. Higher, Lower
IV. Faster, Slower
Answer: I. Higher, Higher

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(3) Which of the below option is correct with regards to a term insurance plan?
I. Term insurance plans come with life-long renewability option
II. All term insurance plans come with a built-in disability rider
III. Term insurance can be bought as a stand-alone policy as well as a rider with
another policy
IV. There is no provision in a term insurance plans to convert it into a whole life
insurance plan
Answer: III. Term insurance can be bought as a stand-alone policy as well as a rider with another policy

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(4) In decreasing-term insurance, the premiums paid ____________ over time.
I. Increase
II. Decrease
III. Remain constant
IV. Are returned

Answer: III. Remain constant

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(5) Using the conversion option present in a term policy you can convert the same
to __________.
I. Whole life policy
II. Mortgage policy
III. Bank FD
IV. Decreasing term policy
Answer: I. Whole life policy

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(6) What is the primary purpose of a life insurance product?
I. Tax rebates
II. Safe investment avenue
III. Protection against the loss of economic value of an individual’s productive
abilities
IV. Wealth accumulation
Answer: III. Protection against the loss of economic value of an individual’s productive abilities

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(7) Who among the following is best advised to purchase a term plan?
I. An individual who needs money at the end of insurance term
II. An individual who needs insurance and has a high budget
III. An individual who needs insurance but has a low budget
IV. An individual who needs an insurance product that gives high returns
Answer: III. An individual who needs insurance but has a low budget

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(8) Which of the below statement is incorrect with regards to decreasing term
assurance?
I. Death benefit amount decreases with the term of coverage
II. Premium amount decreases with the term of coverage
III. Premium remains level throughout the term
IV. Mortgage redemption plans are an example of decreasing term assurance
Plans
Answer: II. Premium amount decreases with the term of coverage

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(9) Which of the below statement is correct with regards to endowment assurance
plan?
I. It has a death benefit component only
II. It has a survival benefit component only
III. It has both a death benefit as well as a survival component
IV. It is similar to a term plan

Answer: III. It has both a death benefit as well as a survival component

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(10) Which of the below is an example of an endowment assurance plan?
I. Mortgage Redemption Plan
II. Credit Life Insurance Plan
III. Money Back Plan
IV. Whole Life Plan

Answer: III. Money Back Plan

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(11) Which among the following is an intangible product?
I. Car
II. House
III. Life insurance
IV. Soap

Answer: III. Life insurance

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(12) The premium paid for whole life insurance is _____________ than the premium
paid for term assurance.
I. Higher
II. Lower
III. Equal
IV. Substantially higher
Answer: I. Higher

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