IC26 LIFE INSURANCE FINANCE - 03
| Q1.The formula for calculating Quick Ratio is - |
| Current assets+ Equity / Current liabilities + Liabilities |
| Current assets / Current liabilities |
| Current assets – cash / Current liabilities |
| Current assets – Stock / Current liabilities – Bank overdraft |
| (Cash and bank balances + Current investment) / Current liabilities |
| Q2.With respect to CLAIM PAYMENTS, insurance companies follow ____ for recording accounting entries. |
| Deferral method |
| Accrual method |
| FIFO method |
| Netting of claims method |
| Grossing of claim method |
| Q3.How should the acquisition costs be treated in the financial statements of a life insurance company? 1. It should be expensed in the period in which paid 2. It should be expensed in the period in which incurred 3. It can be deferred till a maximum of 10 years |
| Only 1 |
| Only 2 |
| Only 3 |
| Both 1 and 3 |
| Both 1 and 2 |
| Q4.The purpose of the special instruction register maintained at branch offices of insurance companies is to ____. 1. note the special requests as received from customers 2. calculate the commissions accurately 3. note important information regarding stoppage of commission |
| Only 1 is correct |
| Only 2 is correct |
| Only 3 is correct |
| Both 1 and 2 are correct |
| Both 1 and 3 are correct |
| Q 5.Which are the basic principles of cash management that insurers need to follow to determine the solvency margin? 1. Profitability 2. Liquidity 3. Safety |
| Both 1 and 2 |
| Both 1 and 3 |
| Both 2 and 3 |
| Only 3 |
| All 1, 2 and 3 |
| Q6.With respect to a Term Insurance policy, which of the following statement(s) is/are INCORRECT? 1. The policy term can be for a maximum of 10 years 2. Term insurance provides protection only for a specific period of time 3. When the insured dies during the policy term, no benefit is payable to him / her 4. In case the insured lives beyond the policy term he had selected, no benefit is payable to him/her |
| 1 and 3 are INCORRECT |
| 2 and 4 are INCORRECT |
| 3 and 4 are INCORRECT |
| 1, 2, and 3 are INCORRECT |
| All 1, 2,3, and 4 are INCORRECT |
| Q7.Areas in which different accounting policies can be adopted include - 1. Valuation of investments 2. Reserve creation for unexpired risks 3. Provision of depreciation |
| Only 1 |
| Only 2 |
| Both 1 and 2 |
| Both 2 and 3 |
| All 1, 2 and 3 |
| Q8.Monu has decided to apply for an insurance policy under the Microinsurance plans. What are the minimum and maximum terms for life insurance under this plan? |
| Minimum 5 years and maximum 15 years |
| Minimum 5 years and maximum 10 years |
| Minimum 3 years and maximum 5 years |
| Minimum 3 years and maximum 10 years |
| Minimum 2 years and maximum 8 years |
| Q9.When is an asset classified as a non-performing asset? |
| If the interest installment and/or installment of principal remain overdue for 30 days |
| If the interest installment and/or installment of principal remain overdue for 60 days |
| If the interest installment and/or installment of principal remain overdue for 90 days |
| If the interest installment and/or installment of principal remain overdue for 180 days |
| If the interest installment and/or installment of principal remain overdue for 365 days |
| Q 10.Which of the below-mentioned ratio, if abnormally high, will mean that the company's solvency is in danger especially if it is accompanied by low profitability. |
| PE Ratio |
| Debt service coverage |
| Return on capital invested |
| Turnover |
| Debt – Equity |