IC-38 Life Insurance — Important MCQs (Part 3)
Questions 101–150 — Click Show Answer for the correct option and a short explanation.
101Which of the following is a core objective of life insurance regulation?
Answer: A
Regulators ensure consumer protection and insurer soundness.
102Which of these best describes 'mortality risk'?
Answer: B
Mortality assumptions drive pricing and reserving for life products.
103What is 'claim settlement ratio' commonly used to measure?
Answer: A
High ratio signals timely claim handling but needs context of repudiations and delays.
104Which is a primary reason insurers request medical reports?
Answer: B
Medicals help price risk accurately and deter adverse selection.
105What does 'adverse selection' refer to?
Answer: B
Underwriting and pricing mitigate adverse selection.
106Which policy feature provides cover only on death within term and not on survival?
Answer: A
Term is cost-effective for income replacement needs.
107Which is true about 'unit allocation' in ULIPs?
Answer: B
Charges like premium allocation and admin reduce units bought initially.
108What is 'vesting age' often relevant to in life plans?
Answer: A
Useful in structuring policies for dependents/ minors via trusts.
109Which of the following is NOT a non-forfeiture option?
Answer: D
Non-forfeiture protects policyholder when premiums stop after minimum years.
110Which document provides full terms, exclusions and conditions of a policy?
Answer: A
Always preserve policy bond and benefit illustrations for future reference.
111What does 'terminal bonus' typically reflect?
Answer: B
It complements reversionary bonuses where declared by insurer.
112Which one is a key function of an actuary in life insurance?
Answer: A
Actuarial work is central to insurer financial soundness and pricing accuracy.
113Which is true about 'bonus vesting'?
Answer: A
Non-vested bonuses are prospective and not guaranteed.
114Which of the following increases insurer's reserve requirements?
Answer: B
Reserving models adjust to emerging experience and regulatory requirements.
115What is 'policy benefit illustration' primarily intended to do?
Answer: B
Not a guarantee but a comparison tool mandated in many jurisdictions.
116Which is an example of a contingent beneficiary?
Answer: B
Naming contingent beneficiaries improves clarity in claims settlement.
117Which is typical when an insurer 'loads' a premium?
Answer: B
Loadings are a form of risk-based pricing applied by underwriters.
118Which is true about policy 'assignment' vs 'nomination'?
Answer: B
Assignment is often used as collateral; insurer must be notified and record it.
119Which factor typically reduces life policy premium?
Answer: B
Underwriting rewards lower risk profiles with better rates.
120Which is part of insurer's solvency management?
Answer: B
Solvency protects policyholders from insurer default risk.
121What does 'free-look' period allow a policyholder to do?
Answer: B
Regulated minimum days apply; ensures buyer protection post issuance.
122Which of the following is true for 'group schemes'?
Answer: B
Group design offers operational efficiency but may limit portability for members.
123Which action can insurer take if material facts are misrepresented?
Answer: B
Consumer protection rules and contestability periods shape remedies available to insurer.
124Which is a common reason to offer 'waiver of premium' rider?
Answer: B
Useful protection ensuring cover continuity without premium burden during disability.
125Which is an example of 'operational risk' for insurers?
Answer: A
Mitigation requires controls, audit, IT security and governance frameworks.
126Which is true about 'table of benefits' in policy schedule?
Answer: B
Important for clarity at the point of sale and for claims processing.
127What is the effect of anti-selection on insurer pricing?
Answer: B
Product design and underwriting guard against anti-selection risks.
128Which of the following typically reduces surrender value in early years?
Answer: A
Explains why surrender early often yields little cash back.
129Which is true regarding 'premium frequency'?
Answer: B
Annual mode often cheapest; insurers provide flexibility with minor loadings for convenience.
130Which is correct about 'policy revival' time limits?
Answer: B
Revival may require medical evidence and payment of arrears plus interest.
131Which is true about surrender penalties?
Answer: B
Penalty structure often slides down over years until full surrender value accrues.
132Which term refers to insurer’s practice of sharing profit with policyholders?
Answer: B
Bonuses reflect insurer investment and mortality experience over time.
133Which is true about benefit pay-out options at maturity?
Answer: B
Choice at maturity should be exercised as per policy clauses and regulators’ rules.
134Which is true about 'policy servicing' obligations?
Answer: A
Good servicing is essential for trust and regulatory compliance.
135Which is true about 'misrepresentation' at proposal?
Answer: B
Utmost good faith requires honest disclosure by proposer.
136Which is a common method to compute reserves for life insurers?
Answer: B
Reserve methods vary by product complexity and regulation.
137Which is a regulator-imposed requirement to protect policyholders?
Answer: A
Regulators monitor capital adequacy, investments and governance to protect consumers.
138Which is true about 'premium redirection' in ULIPs?
Answer: A
A flexibility feature for ULIP investors depending on market views and needs.
139What does 'retrospective bonus' imply?
Answer: A
Terminology varies; check product literature for bonus types and timing.
140Which best practice reduces mis-selling risk by agents?
Answer: A
Regulators emphasize fair practice codes and product suitability tests for agents.
141Which clause deals with suicide in many policies?
Answer: A
Specific terms and waiting periods are stated in policy wording.
142Which is correct about 'premium financing' arrangements?
Answer: A
Useful for high net worth planning but increases complexity and costs.
143Which is an example of a 'non-life' product (not life insurance)?
Answer: A
Life vs general product distinctions matter for regulation and claim handling.
144Which is true about 'policy endorsements'?
Answer: A
Endorsements provide formal record of modifications to original contract.
145Which is the role of 'reinsurer'?
Answer: A
Reinsurance is a standard risk management tool in insurance industry.
146Which is a common disclosure required at point of sale?
Answer: A
Transparent disclosure reduces mis-selling and consumer complaints.
147Which is a benefit of 'premium waiver' rider?
Answer: B
Conditions for waiver (proof, waiting periods) are product-specific.
148Which is true about 'surrender value formula'?
Answer: B
Policy documents and regulations set minimum guaranteed surrender provisions.
149Which is true about 'premium holiday'?
Answer: B
Premium holiday terms vary; some policies permit limited pauses under conditions.
150Which is the correct practice for document retention by policyholders?
Answer: B
Good record-keeping speeds claim settlement and reduces disputes.
