IC02 - LICENTIATE - Practice of Life Insurance 35

IC02 - LICENTIATE - Practice of Life Insurance 35

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Q 1. What is the lock-in period for ULIPs since September 2010?

A) 1 year

B) 3 years

C) 5 years

D) 7 years

E) None of the above


Q 2. What is the purpose of a top-up in ULIPs?

A) To withdraw money from the fund

B) To increase the regular premium amount

C) To reduce the expenses involved in premium payments

D) To invest an additional amount of money over and above the regular premium

E) None of the above


Q 3. How is the unit price calculated in the appropriation method?

A) Market value of the fund divided by the number of units in the fund

B) (Market value of the fund + Cost of purchase of assets + Current assets + Income – Charges applicable – Current liabilities) divided by the number of units in the fund

C) (Market value of the fund - Cost of purchase of assets - Current assets - Income + Charges applicable + Current liabilities) divided by the number of units in the fund

D) (Market value of the fund + Cost of purchase of assets - Current assets + Income – Charges applicable + Current liabilities) divided by the number of units in the fund

E) None of the above


Q 4. Which charges are deducted before allocating the units in a ULIP?

A) Premium allocation charges (PA3)

B) Mortality charges

C) Fund management charges (FMC)

D) Policy administration charges

E) Surrender charges


Q 5. In traditional insurance plans, the premiums are combined and invested by the insurer in a common fund known as the life fund. What happens to the premiums in ULIPs?

A) They are invested in the chosen fund by the policyholder.

B) They are combined with the premiums of other policyholders.

C) They are returned to the policyholder.

D) They are used to pay for administrative charges.

E) They are invested in guaranteed returns instruments.


Q 6. According to the guidelines, what is the minimum guaranteed return offered on the maturity date for ULIP pension/annuity products?

A) 2.5% per annum

B) 3.5% per annum

C) 4.5% per annum

D) 5.5% per annum

E) 6.5% per annum


Q 7. How long is the lock-in period for ULIPs?

A) 1 year

B) 3 years

C) 5 years

D) 7 years

E) 10 years


Q 8. Who does the duty of full disclosure apply to in the context of life insurance?

A) Only the proposer

B) Only the insurer

C) Both the proposer and the insurer

D) Only the agent making representations

E) Neither the proposer nor the insurer


Q 9. What is the basis for insurable interest in the lives of partners?

A) Personal relationships

B) Business ties

C) Financial support

D) Family ties

E) Shared hobbies


Q 10. Why are some people of the opinion that life insurance companies should conform to the requirements of investment companies?

A) Blurring boundaries in financial services

B) Linked life insurance plans offering both risk cover and investment

C) Soliciting public funds for investment

D) Ensuring transparency and investor protection

E) All of the above


Q 11. Which of the following factors are typically assessed by an underwriter to determine the risk of a life insurance proposal?

A) Age of the life insured

B) Pre-existing illnesses or diseases

C) Occupation of the life insured

D) Family history of illness or sickness


Q 12. What is the effect of accepting a life insurance proposal for a lesser sum assured than proposed?

A) Reduces the risk level of an insurance company

B) Increases the risk level of an insurance company

C) does not affect the risk level of an insurance company

D) Decreases the premium charged

E) None of the above


Q 13. What does financial underwriting assess about the person to be insured?

A) Relationship status

B) Existing financial condition

C) Educational background

D) Social media activity

E) None of the above


Q 14. What is the duty of disclosure in life insurance?

A) The duty to maintain policy premiums

B) The duty to disclose relevant information until the policy commences

C) The duty to disclose medical history only

D) The duty to disclose personal financial information

E) None of the above


Q 15. What is the purpose of the preamble section in a policy document?

A) To outline the terms and conditions of the insurance agreement

B) To provide a summary of the main content in simple terms

C) To explain the premium payment options

D) To disclose personal medical information

E) None of the above


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