Insurance - Study Mode

[#191] Which of the following statements is incorrect in case of variable insurance plans?
Correct Answer

(B) Minimum death benefit is guaranteed in variable insurance plans

Explanation

Solution: This policy is quite risky because your cash value and death benefit can fluctuate according to the performance of your investment portfolio. Therefore, if your underlying investments perform well, then your cash value and death benefit may increase accordingly. If your investments perform worse than you expected, your cash value and death benefit may decrease.

[#192] What is the ‘consideration’ from the insured in an insurance contract?
Correct Answer

(A) Premium

Explanation

Solution: The premium is the consideration from the insured, and the promise to indemnify, is the consideration from the insurers.

[#193] Which plan is suitable for accumulation of specific sum of money?
Correct Answer

(B) Endowment

Explanation

Solution: An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.

[#194] Universal life policies are kept in force even if premiums are not paid, provided its cash value was sufficient to pay for the following items:-
Correct Answer

(C) Mortality charges and expenses

Explanation

Solution: Universal life policies are kept in force even if premiums are not paid, provided its cash value was sufficient to pay for Mortality charges and expenses.

[#195] Universal Life plans provide for which of the following facility?
Correct Answer

(C) Both A & B

Explanation

Solution: Universal Life plans provide for Payment of additional premiums over and above the target amount and Skipping of premiums.