Insurance - Study Mode

[#876] Which principle means flow of resources from many to one?
Correct Answer

(A) Mutuality or pooling

Explanation

Solution: Mutuality or pooling principle means flow of resources from many to one. Mutuality is the principle of private, commercial insurance

individuals enter the pool for sharing losses, and pay according to the best estimate of the risk they bring with them.

[#877] Which of the following is incorrect? A. Mutuality means funds from various individuals are combined B. Diversification means spreading out funds to various destinations.
Correct Answer

(D) None of the above

Explanation

Solution: Both the statements are incorrect. Mutuality is the principle of private, commercial insurance

individuals enter the pool for sharing losses, and pay according to the best estimate of the risk they bring with them and Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio.

[#878] State the incorrect of the following.
Correct Answer

(C) Mode of payment of claim is also shown in the policy

Explanation

Solution: Mode of payment of claim is not shown in the policy.

[#879] What are the 2 distinct phases of a Deferred Annuity?
Correct Answer

(C) Accumulation & Payout phases

Explanation

Solution: Accumulation & Payout phases are the 2 distinct phases of a Deferred Annuity. There are two phases for a deferred annuity: the accumulation or deferral phase in which the customer deposits (or pays premiums) and accumulates money into an account
the distribution or annuitization phase in which the insurance company makes income payments until the death of the annuitants named in the contract.

[#880] Which type of Annuity will have 2 distinct phases?
Correct Answer

(B) Deferred Annuity

Explanation

Solution: There are two phases for a deferred annuity: the accumulation or deferral phase in which the customer deposits (or pays premiums) and accumulates money into an account
the distribution or annuitization phase in which the insurance company makes income payments until the death of the annuitants named in the contract.