Que. 1 : ____________________________:This trend involves the separation of the protection and saving elements. Consequently, this results in the development of products, which stress on protection or savings, rather than a vague mix of both.

1.  Unbundling   2.  Bundling   3.  Balanced Fund   4.  None of the above

Que. 2 : When was Variable Life Insurance first introduced in United States?

1.  1977   2.  1970   3.  1965   4.  1980

Que. 3 : ________________________________: Unbundling also ushered greater visibility in the rate of return and in the charges made by the companies for their services. All these were explicitly spelt out and could thus be compared

1.  Unbundling   2.  Bundling   3.  Transparency   4.  None of the above

Que. 4 : The Cash value component in traditional products is

1.  Not well defined   2.  Pre-planned   3.  Well defined   4.  Not pre-planned

Que. 5 : __________________________:The fourth major trend has been a shift from rigid to flexible product structures. This is also seen as a move towards non-standard products. When we speak of non–standard, it is with respect to the degree of choice, which a customer can exercise with respect to designing the structure and benefits of the policy.

1.  Unbundling   2.  Bundling   3.  Transparency   4.  Non-standard products

Que. 6 : _____________________ means allocation across time. The term effective here implies that sufficient funds are available to successfully satisfy various needs as they arise in different stages of the life cycle.

1.  Inter-temporal allocation   2.  Efficient allocation   3.  Bundling   4.  Transparency

Que. 7 : ____________________ on the other hand implies a faster rate of accumulation and more funds available in future. Higher the return for a given level of risk, the more efficient would the investment be.

1.  Inter-temporal allocation   2.  Efficient allocation   3.  Bundling   4.  Transparency

Que. 8 : Which of the below is a limitation of traditional products?

1.  Cash value component: Firstly, the savings or cash value component in such policies is not well defined. It depends on the amount of actuarial reserve that is set up. This in turn is determined by assumptions about mortality, interest rates, expenses and other parameters that are set by the life insurer. These assumptions can be quite arbitrary.   2.  Rate of return: Secondly it is not easy to ascertain what would be rate of return on these policies. This is because the value of the benefits under “With Profit policies” would be known for sure, only when the contract comes to an end. Again, the exact costs of the insurer are not disclosed. This lack of clarity about the rate of return makes it difficult to compare them with other alterative instruments of savings. bviously one cannot know how efficient life insurance is as a savings instrument unless one can make such comparison.   3.  Surrender value: A third problem is that the cash and surrender values (at any point of time), under these contracts depend on certain values (like the amount of actuarial reserve and the pro-rata asset share of the policy). These values may be determined quite arbitrarily. The method of arriving at surrender value is not visible.   4.  All of the above

Que. 9 : Which of the below is a limitation of traditional products?

1.  Yield: Finally there is the issue of the yield on these policies. Both because of prudential norms and tight supervision on investment and because bonuses do not immediately reflect the investment performance of the life insurer, the yields on these policies may not be as high as can be obtained from more risky investments.   2.  Rate of return: Secondly it is not easy to ascertain what would be rate of return on these policies. This is because the value of the benefits under “With Profit policies” would be known for sure, only when the contract comes to an end. Again, the exact costs of the insurer are not disclosed. This lack of clarity about the rate of return makes it difficult to compare them with other alterative instruments of savings. bviously one cannot know how efficient life insurance is as a savings instrument unless one can make such comparison.   3.  Surrender value: A third problem is that the cash and surrender values (at any point of time), under these contracts depend on certain values (like the amount of actuarial reserve and the pro-rata asset share of the policy). These values may be determined quite arbitrarily. The method of arriving at surrender value is not visible.   4.  All of the above

Que. 10 : ________________________: Finally there is the issue of the yield on traditional policies. Both because of prudential norms and tight supervision on investment and because bonuses do notmimmediately reflect the investment performance of the life insurer, the yields on these policies may not be as high as can be obtained from more risky investments.

1.  Yield   2.  Rate of return   3.  Surrender value   4.  Cash value component

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