Insurance - Study Mode

[#51] If assets are overvalued, the result would be
Correct Answer

(A) More surplus

Explanation

Solution: If assets are overvalued, the result would be more surplus. As a result of over valuation of all the assets of an insurance company, the company's financial statements would show more surplus than the actual one.

[#52] Which of the following factors are taken into account for financial underwriting?
Correct Answer

(D) All of the above

Explanation

Solution: Income, occupation, lifestyle, habits and many other factors play an important role in financial underwriting.

[#53] When is it essential for insurable interest to be present in case of life insurance?
Correct Answer

(A) At the time of taking out insurance

Explanation

Solution: Insurable interest is essentially a monetary interest which one should have on the continuing existence of the object of insurance. So, it is important for it to be there at the time of taking out insurance.

[#54] Which of the following is correct?
Correct Answer

(A) Extra benefits are allowed by the insurer in a life policy on payment of an extra premium
(G) A portion of the surplus would be left for distribution to shareholders
(L) All of the above

Explanation

Solution: Extra benefits are allowed by the insurer in a life policy on payment of an extra premium and extra premium for health is different from extra premium for extra benefits. Double accident benefits and Permanent Disability benefits are available on payment of extra premium.

[#55] Which of the following statements is incorrect with regards to decreasing term assurance?
Correct Answer

(B) Premium amount decreases with term of coverage

Explanation

Solution: Premium amount increases with the term of coverage. Hence, option (2) is incorrect.