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English Mock Test Chapter 10

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Question 1
What does the term “premium” denote in relation to an insurance policy?
A
Price paid by an insured for purchasing the policy
B
Profit earned by the insurer
C
Margins of an insurer on a policy
D
Expenses incurred by an insurer on a policy
Question 2
Which of the below is not a factor in determining life insurance premium?
A
Mortality
B
Reserves
C
Rebate
D
Management expenses
Question 3
What is a policy withdrawal?
A
Discontinuation of premium payment by policyholder
B
Policy upgrade
C
Policy downgrade
D
Surrender of policy in return for acquired surrender value
Question 4
Which of the below is one of the ways of defining surplus?
A
Excessive liabilities
B
Excess value of assets over liabilities
C
Excessive turnover
D
Excess value of liabilities over assets
Question 5
Which of the below is not a component of ULIP premiums?
A
Social security charge
B
Policy allocation charge
C
Investment risk premium
D
Mortality charge
Question 6
Life insurance companies may offer rebate to the buyer on the premium that is payable on the basis of ___________.
A
Type of policy chosen by the buyer
B
Term of the plan chosen by the buyer
C
Sum assured chosen by the buyer
D
Mode of payment (cash, cheque, card) chosen by the buyer
Question 7
Interest rates are one of the important components used while determining the premium. Which of the below statement is correct with regards to interest rates?
A
The interest rates don’t affect premiums
B
Higher the interest rate assumed, lower the premium
C
Lower the interest rate assumed, lower the premium
D
Higher the interest rate assumed, higher the premium
Question 8
Which of the below statement is correct?
A
The typical loading to a net premium would have 3 parts: a) a constant amount for premiums b) a constant amount for each ‘1000 sum assured’ and c) a constant amount per policy
B
The typical loading to a net premium would have 3 parts: a) a percentage of premiums b) a constant amount for each ‘1000 sum assured’ and c) a constant amount per policy
C
The typical loading to a net premium would have 3 parts: a) a percentage of premiums b) a constant percentage for each ‘1000 sum assured’ and c) a constant amount per policy
D
The typical loading to a net premium would have 3 parts: a) a percentage of premiums b) a constant amount for each ‘1000 sum assured’ and c) a percentage amount per policy
Question 9
With regards to valuation of assets by insurance companies, __________ is the value at which the life insurer has purchased or acquired its assets.
A
Market value
B
Discounted future value
C
Book value
D
Discounted present value
Question 10
In case of __________, a company expresses the bonus as a percentage of basic benefit and already attached bonuses.
A
Reversionary bonus
B
Compound bonus
C
Terminal bonus
D
Persistency bonus
Question 11
What does a policy lapse mean?
A
Policyholder discontinues premium payment for a policy
B
Policyholder completes premium payment for a policy
C
Policy attains maturity
D
Policy is withdrawn from the market
Question 12
Who bears the investment risk in case of ULIPs?
A
Insurer
B
State
C
Insured
D
IRDA
Question 13
What does the term “premium” denote in relation to an insurance policy?
A
Profit earned by the insurer
B
Margins of an insurer on a policy
C
Price paid by an insured for purchasing the policy
D
Expenses incurred by an insurer on a policy
Question 14
Single Premium contracts are ___________________________
A
Policy of a single person
B
Investment oriented
C
Tax benefit oriented.
D
None of the above
Question 15
In the case of monthly mode in a insurance policy the premium will be __________________________ than yearly premium.
A
less
B
more
C
same
D
variable
Question 16
Extra premium can be charged for ______________
A
health problem
B
hazardous occupation
C
habit of smoking
D
All of the above
Question 17
Net premium is derived after considering _______________________
A
sum assured
B
mode of payment
C
Interest earnings
D
term
Question 18
What does a policy lapse mean ?
A
Policyholder completes premium payment for a policy.
B
Policy attains maturity.
C
Policyholder discontinues premium payment for a policy.
D
Policy is withdrawn from the market.
Question 19
If surplus is negative, it is known as
A
Negative profit
B
Periodic valuation
C
Strain
D
Liability
Question 20
The reversionary bonus is declared _________________
A
Every month
B
1st of January
C
Every year
D
Every Diwali festival
Question 21
Who bear the investment risk in ULIP ?
A
Insured
B
Insurer
C
State
D
IRDA
Question 22
The charges for insurance protection and expenses components of a  unit linked product are disclosed to ____________________________
A
Customer
B
Actuary
C
IRDA
D
Only to agent
Question 23
For a specified person, what will be mortality rate for 10 years and 15 years policy term?
A
Mortality rate will be low for 15yrs PT
B
Mortality rate will be high for 10yrs PT
C
Mortality rate will be high for 15yrs PT
D
Mortality rate will be constant
Question 24
Which of the following is correct with regard to ‘interest & risk premium’?
A
Total risk premium is always higher for a longer policy term
B
There is no relationship between risk premium and interest
C
Interest is a discount arrived at future value of present claim payment
D
Total risk premium is always lower for a longer policy term
Question 25
Will there be any difference, when Mr. A pays premium in annual mode comparing to Mr. B pays premium in monthly mode?
A
Premium of B is higher than A
B
Premiums of both A and B are same
C
Premium of A is higher than B
D
Premiums will always differ irrespective of mode
Question 26
When a person is not suffering from any diseases or other problem, then the person is
A
Standard Lives
B
Normal Lives
C
Special Lives
D
Super Lives
Question 27
What is the formula to find present value of future liabilities?
A
Future cost/[1*(Interest rate *100)]^No of Years
B
Future cost/[1+(Interest rate /100)]^No of Years
C
Future cost/[1+(Interest rate *100)]^No of Years
D
None of the above
Question 28
Why actuaries assume a higher mortality rates and lower interest rates than the actual expected?
A
To make extra profit
B
To charge high premium
C
To be extra cautious
D
None of the above
Question 29
What is the difference between net single premium and net level annual premium?
A
Net single premium is for single premium policies
B
Net level annual premium is for regular or limited premium policies
C
Net level annual premium is arrived by dividing the net single premium by PPT
D
None of the above
Question 30
Which of the below is not true with regard to loading?
A
To ensure each type of policies expenses is managed by the respective loadings
B
To ensure it takes care of the expenses of the company
C
To ensure all types of policies expenses is managed by the total loadings
D
To ensure the product is competent and also profitable to the company
Question 31
For the term ‘New business strain’ which of the following is correct?
A
Expenses and reserves are higher than the first year premium
B
Expenses in the first year premium is low, but reserves are high
C
Expenses and reserves are higher than the total premium (First year premium and renewal premium)
D
None of the above
Question 32
Which of the following is a element of determining the premium?
A
Mortality
B
Interest
C
Expenses of management
D
All of the above
Question 33
Which of the following is a element of determining the premium?
A
Mortality
B
Interest
C
Reserves
D
All of the above
Question 34
Which of the following is a element of determining the premium?
A
Mortality
B
Interest
C
Bonus loading
D
All of the above
Question 35
To arrive at “Net Premium” the first step is to estimate the _________________ value of __________________ claim costs.
A
present, future
B
future, present
C
All of the above
D
None of the above
Question 36
To arrive at “Net Premium” the first step is to estimate the present value of future claim costs. The reason for estimating present value is that we are trying to find out how much we need at hand today to meet claims that may arise in the future. This process of estimating present value brings us to the next element in premium determination, namely _________________ .
A
“Interest”
B
Reserves
C
Risk
D
Expenses
Question 37
_________________ the mortality rate in the mortality table, ___________________ the premiums would be
A
Higher, higher
B
Lower, higher
C
Higher, lower
D
Lower, lower
Question 38
__________________ the interest rate assumed, __________________ the premium
A
Higher, higher
B
Lower, higher
C
Higher, lower
D
Lower, lower
Question 39
Which of the below is the Guiding Principles for determining Amount of Loading?
A
Adequacy
B
Equity
C
Competitiveness
D
All of the above
Question 40
Life insurers have to incur various types of operating expenses including:
A
Agents training and recruitment
B
Commissions of agents
C
Staff salaries
D
All of the above
Question 41
Life insurers have to incur various types of operating expenses including:
A
Agents training and recruitment
B
Commissions of agents
C
Office accommodation
D
All of the above
Question 42
Life insurers have to incur various types of operating expenses including:
A
Agents training and recruitment
B
Office stationery
C
Office accommodation
D
All of the above
Question 43
Life insurers have to incur various types of operating expenses including:
A
Electricity charges
B
Office stationery
C
Office accommodation
D
All of the above
Question 44
_____________________:The worth of the life insurer’s assets in the market place.
A
Discounted Present Value
B
Book value
C
Market value
D
All of the above
Question 45
_____________________: This is the value at which the life insurer has purchased or acquired its assets
A
Discounted Present Value
B
Book value
C
Market value
D
All of the above
Question 46
_____________________:Estimating the future income stream from various assets and discounting them to the present
A
Discounted Present Value
B
Book value
C
Market value
D
All of the above
Question 47
Which of the below is a type of reversionary bonus?
A
Simple Reversionary Bonus
B
Compound Bonus
C
Terminal Bonus
D
All of the above
Question 48
The dividends that are declared may be used in one of the following  way :
A
It may be paid in the form of dividends in cash
B
In the form of adjustment to, and reduction in future premiums
C
A third method is to allow purchase of non-forfeitable paid up additions to the policy
D
All of the above
Question 49
The dividends that are declared may be used in one of the following  way :
A
It may be paid in the form of dividends in cash
B
In the form of adjustment to, and reduction in future premiums
C
dividends may be allowed to accumulate, with interest, to the credit of the policy. It may be either withdrawn at the option of policyholder or only at the end of the contract
D
All of the above
Question 50
____________________ :The charges for insurance protection and expenses component of a unit linked product are clearly specified. Once these charges are deducted from the premium the balance of the account and income from it is invested in units. The value of these units is fixed with reference to a pre-determined index of performance.
A
Transparent structure
B
Pricing
C
Unitising
D
The bearing of investment risk
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