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English Mock Test Chapter 6

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Question 1
What does NAV stands for in an ULIP?
A
Net Asset Value
B
Net Assumed Value
C
Net Assured Value
D
Net Average Value
Question 2
What does inter-temporal allocation of resources refer to?
A
Postponing allocation of resources until the time is right
B
Temporary allocation of resources
C
Allocation of resources over time
D
Diversification of resource allocation
Question 3
Which among the following is a limitation of traditional life insurance products?
A
Yields on these policies is high
B
Clear and visible method of arriving at surrender value
C
Well defined cash and savings value component
D
Rate of return is not easy to ascertain
Question 4
Where was the Universal Life Policy introduced first?
A
Great Britain
B
USA
C
Germany
D
France
Question 5
Who among the following is most likely to buy variable life insurance?
A
Knowledgeable people comfortable with equity
B
People seeking fixed return
C
People who are risk averse and do not dabble in equity
D
Young people in general
Question 6
All of the following are characteristics of variable life insurance EXCEPT:
A
Cash value is not guaranteed
B
Flexible premium payments
C
Policy owner selects where savings reserve is invested
D
Minimum Death benefit is guaranteed
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
A
I is true
B
I and II are true
C
I and II are true
D
I and II are false
Question 8
Which of the below statement is true regarding ULIP’s?
A
Value of the units is determined by a formula fixed in advance
B
Investment risk is borne by the insurer
C
ULIP’s are opaque with regards to their term, expenses and savings components
D
ULIP’s are bundled products
Question 9
All of the following is true regarding ULIP’s EXCEPT:
A
Unit holder can choose between different kind of funds
B
Units may be purchased by payment of a single premium or via regular premium payments.
C
Life insurer provides guarantee for unit values
D
ULIP policy structure is transparent with regards to the insurance expenses ComponenT
Question 10
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
A
I only
B
I and II both
C
I and II both
D
Neither I nor II
Question 11
What does unbundling of life insurance products refers to?
A
Separation of the protection and savings element
B
Correlation of life insurance products with bonds
C
Correlation of life insurance products with equities
D
Amalgamation of protection and savings element
Question 12
Which among the following is a non-traditional life insurance product?
A
Term assurance
B
Endowment insurance
C
Universal life insurance
D
Whole life insurance
Question 13
Which of the below statement is incorrect?
A
Variable life insurance is a permanent life insurance policy
B
The policy has a cash value account
C
Variable life insurance is a temporary life insurance policy
D
The policy provides a minimum death benefit guarantee
Question 14
As per the IRDA Circular of November 2010, All Universal Life products shall be know as ______________
A
Unit Variable Plans
B
Variable Insurance Plans
C
Unit Linked Insurance Plan
D
Term Assurance
Question 15
Which among the following is not a non-traditional life insurance product?
A
ULIP
B
Whole life insurance
C
Universal life insurance
D
Variable life insurance
Question 16
Rajesh wants to purchase a Ulip. However he is skeptical of losing his money in equity and hence wants a fund which would give him moderate returns along with security. Which fund will you suggest to him?
A
Debt Fund
B
Equity fund
C
Balanced Fund
D
None of the above
Question 17
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
A
I is true
B
II is true
C
I and II are true
D
I and II are false
Question 18
Samaresh is a engineer. He is married and has 2 sons aged 6 years and 11 years. He wants to purchase a ULIP and has shown interest in investing in a fund where major portion should be invested in equity related instruments. Which fund would you suggest for her?
A
Money Market Fund
B
Debt Fund
C
Equity Fund
D
Balanced Fund
Question 19
Which is the fund where major portion of the money is invested in Government Bonds, Corporate Bonds, Fixed Deposits?
A
Balanced Fund
B
Money Market Fund
C
Equity Fund
D
Debt Fund
Question 20
Animesh is paying Rs 1.5 lac annually in a plan. The returns of his plan would depend upon the movements of the capital market. Which product has he invested in?
A
Pure Endowment Plan
B
Term Assurance Plan
C
Unit Linked Plan
D
Annuity Plan
Question 21
_____________________________: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.
A
Unbundling
B
Bundling
C
Balanced Fund
D
None of the above
Question 22
When was Variable Life Insurance first introduced in United States?
A
1977
B
1970
C
1965
D
1980
Question 23
__________________________________: 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
A
Unbundling
B
Bundling
C
Transparency
D
None of the above
Question 24
The Cash value component in traditional products is
A
Not well defined
B
Pre-planned
C
Well defined
D
Not pre-planned
Question 25
_____________________________: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.
A
Unbundling
B
Bundling
C
Transparency
D
Non-standard products
Question 26
________________________ 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.
A
Inter-temporal allocation
B
Efficient allocation
C
Bundling
D
Transparency
Question 27
______________________ 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.
A
Inter-temporal allocation
B
Efficient allocation
C
Bundling
D
Transparency
Question 28
Which of the below is a limitation of traditional products?
A
"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."
B
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.
C
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.
D
All of the above
Question 29
Which of the below is a limitation of traditional products?
A
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.
B
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.
C
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.
D
All of the above
Question 30
_________________________: 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.
A
Yield
B
Rate of return
C
Surrender value
D
Cash value component
Question 31
_____________________________: 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.
A
Yield
B
Rate of return
C
Surrender value
D
Cash value component
Question 32
__________________________: 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.
A
Yield
B
Rate of return
C
Surrender value
D
Cash value component
Question 33
____________________ : 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.
A
Yield
B
Rate of return
C
Surrender value
D
Cash value component
Question 34
Which of the below is a shift to non -traditional products?
A
Unbundling
B
Investment linkage
C
Transparency
D
All of the above
Question 35
Which of the below is a shift to non -traditional products?
A
Unbundling
B
Investment linkage
C
Non-standard products
D
All of the above
Question 36
Universal life insurance is a form of  ____________________life insurance.
A
permanent
B
Temporary
C
Traditional
D
All of the above
Question 37
Which of the below is a characteristics of universal Life Insurance products?
A
flexible premiums
B
fixed face amount
C
fixed death benefit amount
D
bundling of its pricing factors
Question 38
Which of the below is a characteristics of universal Life Insurance products?
A
fixed premiums
B
flexible face amount
C
fixed death benefit amount
D
bundling of its pricing factors
Question 39
Which of the below is a characteristics of universal Life Insurance products?
A
fixed premiums
B
fixed face amount
C
flexible death benefit amount
D
bundling of its pricing factors
Question 40
Which of the below is a characteristics of universal Life Insurance products?
A
fixed premiums
B
fixed face amount
C
fixed death benefit amount
D
unbundling of its pricing factors
Question 41
Which of the below is not a characteristics of universal Life Insurance products?
A
Flexible premiums
B
Flexible face amount
C
Flexible death benefit amount
D
bundling of its pricing factors
Question 42
Which of the below is a characteristics of universal Life Insurance products?
A
Flexible premiums
B
Flexible face amount
C
fixed death benefit amount
D
unbundling of its pricing factors
Question 43
Which of the below is a characteristics of universal Life Insurance products?
A
Flexible premiums
B
fixed face amount
C
Flexible death benefit amount
D
unbundling of its pricing factors
Question 44
Which of the below is a characteristics of universal Life Insurance products?
A
fixed premiums
B
Flexible face amount
C
Flexible death benefit amount
D
unbundling of its pricing factors
Question 45
A __________________ cash value policy has a face amount that remains level throughout the policy term.
A
traditional
B
non traditional
C
Variable
D
Universal life insurance
Question 46
Assets backing the policy reserves form part of a general __________________  in which the insurer maintains the funds of its guaranteed products.
A
Disbursement Accounts
B
Investment account
C
Risk Account
D
None of the above
Question 47
Where Unit linked insurance first introduced?
A
India
B
USA
C
China
D
UK
Question 48
which of the below is a component of ulip premium?
A
Expenses
B
Mortality
C
Investment
D
All of the above
Question 49
________________________ fund invests major portion of the money in equity and equity related instruments.
A
Equity Fund
B
Debt Fund
C
Money Market Fund
D
Balanced Fund
Question 50
____________________ fund invests money mainly in instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper etc.
A
Equity Fund
B
Debt Fund
C
Money Market Fund
D
Balanced Fund
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