Insurance - Study Mode

[#311] Free assets of a company are –
Correct Answer

(B) Unallocated surpluses

Explanation

Solution: Free assets of a company are Unallocated surpluses. Free assets are the assets held over and above the liabilities (which may or may not include supervisory reserves), whilst surplus is the amount held over and above the reserve level.

[#312] An insurance company needs free assets for –
Correct Answer

(D) All of the above

Explanation

Solution: An insurance company needs free assets for Financing new business, Generating more competitive returns and Greater leverage in investment.

[#313] In respect of Bonuses, which of the following is incorrect?
Correct Answer

(C) Premiums need not have been paid for a specified no. of years

Explanation

Solution: In respect of Bonuses, Premiums need to be paid for a specified no. of years.

[#314] Which is a bonus?
Correct Answer

(D) Any of the above

Explanation

Solution: Simple reversionary bonus, Compound reversionary bonus and Terminal bonus, all this are bonus. Simple reversionary bonus is a with profits life assurance bonus, normally declared annually, which is based on the profits of the life company's investment and is payable at the maturity of the policy or prior death. Simple Reversionary bonus (SRB) This type of bonus is calculated on the sum assured only. This bonus is declared annually and is accrued to be paid out at the time of a claim or maturity. Terminal Bonus is also known as persistency bonus which is paid once, i.e. at the time of maturity of the policy.

[#315] Terminal Bonus would _________ with the duration/term of the policy.
Correct Answer

(A) Increase

Explanation

Solution: Terminal Bonus would increase with the duration/term of the policy.