IC 92 Multiple Question Bank

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MCQ ON IC 92
Q.1. Premium Rs.594000, benefit value Rs.500000, inflation rate 8%, profit margin x %. Find x
A. 12% B. 10% C. 11% D. 8%
Ans. B
Q.2. Benefit value 600000, expenses rate 9%, profit margin 10% what is premium.
A. 600000 B.719000 C.619000 D.700000 E.nota
Ans. B
3. RSM regime. Solvency ratio 1.5%. RBC 500 crore, RSM 400 crore. How much more is required by company
A. 100 cr B. 600 cr C. 1000 cr D. 200 cr
Ans. D
4. In RBC Regime, RBC 1000 cr, RSM 600 cr. Solvency ratio 1.5%. How much more is required by company.
A. 400 cr B. 1500 cr C. 900 cr D. 200 cr
Ans. A
5. Sam has a double cover endowment policy. Sum assured 100000, single premium 96000. Term 10 years. Sam
dies during the term. How much will his nominee get.
A. 150000 B. 200000 C. 300000 D. 1000000 E. None
Ans. B
6. Number of survivors at age 38 are 77856, at age 39 are 76999. Determine the liability percentage at age 38.
A. 1% B. 1.1% C. 0.95% D. 1.25% E. 1.21%
Ans. B
7. Abc insurance company sells 2000 policies. Expects 10 claims of rs.5000 each. What pure premium should be
charged from each of 2000 policy holders.
A. 35 B. 27.50 C. 27 D. 25 E. Nota
Ans. D
8. The drive to do something to achieve an end is called

A. Need B. motivation C. power D. willingness E.none
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www.ambitiousbaba.com
Ans. D
9. Bonus declared last year 5 % of sum assured 1000. This year 15% declared in last year. What is compound
reversionary bonus in this year.
A. 50 B. 7.50 C. 57.50 D. 58 E. nota
Ans. C
10. Sam buys endowment assurance policy with profits. Sum assured 5 lakh. Term 15 years. He dies in the
seventh year after payment of 7 annual premiums. Vested bonus is 43000. What is benefit payable to the
nominee on his death.
A.543000 B.243000 C.43000 D.343003 E.none
Ans. A
11. Rate of maximum commission for first year policy of insurance company having completed 10 years
A.25% B.30% C.35% D.20% E. Nota
Ans. C
12. Who pays commission to agents

A. Policy holder B. Director. C. Share holders of the co. D. A & b E. Nota
Ans. E
13. Who will pay commission to agents
A. Directors of Co. B. Marketing executives C. Ins. Co. D. A and b E. Nota
Ans. C
14. Cost of agents training is considered as

A.commission B.procurement exps. C. Capital expenditure D. Revenue expenditure E. Nota.
Ans. B
15. The insurance company exempts policy owner from payment of premium. If the insured becomes unable to
work because of accident, in which case it is called
A. Accident/death benefit rider B. Guaranteed investment rider.
C. Accelerated benefits rider. D. Waiver of premium rider
Ans.
16. Which is correct

A. Estimate of discount rate considers duration of liability
B. Estimate of discount rate considers future expected inflation rate.
C. Estimate of discount rate considers asset and duration of liability.
D. A & C
E. All of the above.
Ans. C
17. Which of the following is false.

A. Fall in interest rate assumptions results in increase in premium for a term insurance policy
B. Discount rate assumptions takes into account estimated investment returns.
C. Determination of premium involves expected benefit payouts with discount rates.
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D. A and b
E. All of the above.
Ans. C
18. Who pays commission for the policies sold through internet.
A. No one B. Employees f the company
C. Directly by co D. Commission amount to be distributed among all agents.
Ans. A
19. What is true

A. Components of asm considers insurance risk of the business. B. Asm means free assets if company
C. interest earned is considered while calculating asm D. A&C
E. all of the above.
Ans. D
20. Which is false

A. Policy sold directly on internet has no commission.
B. I year commission of a five year term policy is lower than a single premium in terms of percentage of
premium.
C. Only in some products agents can have commission based on sum assured.
D. B and C
E. A and C
Ans. D
21. Premium base scenario must meet profit requirement

A. Maximum B. desirable C.optimum D minimums. E. Nota
Ans. B
22. Which is common type of group insurance product generally offered
A. Group term insurance products. B.group savings linked insurance
C.group guarantee cover D.group health insurance scheme
E.nota
Ans. A
23. How is annuity paid

A. In instalments B.lump sum C. In annual instalments D. Nota
Ans. A
24. Generally non conventional group are

A. Less homogeneous B.homogeneous C. cohesive D.non cohesive E. Nota
Ans. A
25. Which is true

A. Agents can work for 3 life insurance company and brokers for three insurance companies
B. Financial position is important parameter in considering commission rates
C.retention probability can be considered as an important parameter in determining commission rates.
D. A and c
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E. Nota
Ans. E
26. Which of the following statements are true

A. Solvency margin can be defined as margin by which assets exceeds tech reserves.
B. new business strain can be defined as potential on a policy.
C. Profit margin can be defined as sum of future net cash flow to first year premium
D. A and b
E. Nota
Ans. D
27. If the policy was surrendered in fifth to seventh year what is the % of premium refunded
A. 70 B. 90 C. 100 D. 80 E. Nota
Ans. A
28. What us the basis of insurance contract between policy holder and insurance company
A.contract act B. Insurance act C. Proposal form D. IRDA E. Nota
Ans. C
29. As per Indian Regulation Act, calculation of RSM depends on

A. Technical reserve B. Shareholders capital C. Sum at risk D. A and c E. All
Ans.
30. Fact finding session was for health care and estate planning and the assured was
A. Young man B. retired man
C. Young man with a child D. A man in the pre retirement stage.
E. Nota
Ans. B
31. Bank as distributors are

A. Agents B. Broker C. Corporate agent D. Tied agent C. Nota.
Ans. B
32. Commission less in group policy as co.pared to individual policy. True/false

Ans. True
33. Life insurance table are used to calculate
A. Premium rates B. Interest rates C. Commission rates D. All of the above.
Ans. A
34. While determining retention limit insurance company needs to consider the following parameters
A. Insurance experience in the product B. Insurers financial position
C. Solvency capability of reinsurance arrangements if any. D. B and C
E. All the above.
Ans. E
35. Product pricing is independent of
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A. Business mix B. Investment policies C. Competition D. Reinsurance policy E. Nota.
Ans. A
36. Loan can be available on policy

A. Endowment B. Term policy C. ULIP D. Money back E. A & D.
Ans. A
37. Expenses in pricing could be

A. Fixed B.variable C.Direct D.indirect E.all the above
Ans. E
38. Prescribed formulae for calculation of a RSM considers

A. Interest rate risk B. Reinsurer default risk
C. Expenses over risk D. A and c
E. All the above.
Ans. D
39. To whom the payout will be higher in term insurance

A. A male who is a smoker aged 45 B. A woman non smoker with age 45
C. A male non smoker age 45 D. A male smoker age 45.
Ans.
40. As an insurance intermediary banks act as

A. Agents B. Broker C. Call centre D. Direct selling force E. Nota.
Ans. B
41. a person aged 20 year insured under a 15 year pure term policy for 200000. The vested bonus is 22000. He
died at age 37. What amount the nominee will get?
Ans. Nothing is payable as the policy ha ready expired.
42. In profit product investment risk is with

A. Employees B. policy holders C. shareholders D. all the above E. policyholders & shareholders.
Ans. B
43. RSM calculation is based on shareholders under which include

A. Shareholders capital B. Policyholders fund
C. Technical reserve and other risk D. Mortality and interest rate risk.
E. All the above.
Ans. E - All of above
44. Life insurance is also known as

A. Annuities business B. Health business C. Long term business D. Short term business
Ans. C (LIC is long term business)
45. Annual premium 3000 net premium 2520 per year. The difference between net premium and actual
premium is
A. Interest on policy B. amount of loading on policy
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C. Net amount at risk for policy D. Reserve liability cor the policy.
E.nota
Ans. B
46. In a single premium term insurance policy commission loading can be described as
A. Initial commission B. Sum of commission in all the year
C. There is no commission loading D. Sum of present value of initial and renewal commission
E. Nota
Answer E. Nota since it always charged as a loading on premium
47. Ceding commission is paid by whom

A. Reinsurer B. Insurer C. Insured D. Govt. E. IRDA
Ans. A
48. Sam purchased a policy for himself, wife and his two children aged 14 and 7 years. He will get IT rebate for
A. Himself B. His wife and himself
C. For his one child, wife and himself D. All
Ans. D
49. Health insurance is part of which line of insurance?

A. Life insurance B. General insurance C. Standalone life of business D. All of the above
Ans. C
50. At 58 no of survivors 73568 with mortality rate 1.7% at age 59 Mortality Rate 2.34% what will be the no of
survivors at age 60?
Ans- 73568×1.7%= -- = ×2.34%= -- =answer
51. If sum of expected benefit payout is Rs.850000 and sum of present value of all the expenses is Rs 150000/-
which of the following be the approx. Amount of sum of present value of annual premium
A) A bit more than 10,00.000/- B) Approx 10,00,000
C) Much more than 10,00,000 D) A bit lower than 10,00,000
E) Much less than 10,00,000
Ans. E
52. Recurrent single prom approach is in

A. Large scheme B. All scheme C.Small scheme D. Only employer employee
Ans. D
53. Interest rate changes effects

A. Annuity B. Endowment C. Single payment D. A and b E. All the above.
Ans. E
54. A single policy issued as evidence of the contract of group coverage is called policy
A. master B. group C. individual D. All of the above
Ans. Master policy
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55. Mortality factor is the most important factor for pricing of
A. ULIP B. Whole life C. Term product D. Endowment E. Nota
Ans. C
56 retention is high when
A. Low frequency and high severity B. Low severity and high frequency
C. high severity D. low severity
Ans. D
57. Adverse selection is due to

A. Lack of awareness B. Wrong policy selection
C. Wrong target population selected D. Nota.
Ans. C
58. Single perm term policy commission loading can be described as

a) Initial commission b) Sum of commission in all yrs
c) No commission loading d) Pv of initial+ renewal commission
e) Nota
Ans. A
59. If RBC Rs.500/- RSM Rs. 400/- solvency ratio 1:5 how much free assests insure should have?
Ans. Rs.600/-
60. RSM regime solvancy ratio 1.5%. RBC 500 cr. RSM 400 cr. How much more is required by co.
A. 100 cr B. 600 cr C. 1000 cr D. 200 cr
Ans. A
61. Initial cost of procurement is Rs.2000. Initial premium receivable in 1st year Rs.100. Initial premium related
expenses 1%. Fixed expenses per policy Rs. 700. Cost independant of other expenses per policy Rs 300. Calculate
1st year expenses.
1) 3100 2) 3101 3) 3001 4) 2800 5) 1000.
ANS- 2000+100+1+700+300=3101
62. Jeevan arogya , a new plan in LIC deals like our mediclaim policy. Is it under 80D
ANS- Yes. 80D limitations also applicable to this rebate i.e. Rs 25000 for junior citizens and 30000 for senior
citizens from the financial year 2015-2016 under income-tax act.
63. When a person do estate & health planing?

A) after marriage B) after having children's C) first salary D) pre retirement E) after retirement
ANS- The correct answer is E. Apply logic. In younger healthy age no body bothers for health. Afterwards the
employer takes care under group Health scheme. It is only after Retirement when earnings finishes. And in
older age the frequncy of deases increases and the person starts thinking for health in older age. Estate planning
in itself shows that the person thinking about this is in after retirement stage. After death which property should
go to whom is called estate planning. He also plans to whom his estate should go after his death. Which estate
to whom? then he plans and execute his will under estate planning that is only after retirement.
64. No claw back will result into ..... commission
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A) lower
B) higher
C) no affect on comm
D) claw back conditions results into higher commissions intially but reduction in comm. later
ANS- B. (जब को ई पो लिसो बो मो कर् ो ो क बोक्स मोो नह ो ो रहर् ो और बो मो धो रक द् वो र कोो िसलो कर को
ररफो ो ड लोो लियो जो र् ो हो र् ो कलोो बोक
कहलोो र् ो हो जजसको लिए एजोन्ट क कमो शन वो पसो सो अतरर रक्रो् अन्य आर् थक दण्ड लोगो यो जो र् ो हो जजसो
कलोो बोक कहरो्ो ह।ोो Claw
back is a specific term in lic onlg. In claw back all Commission is recovered and a financial penlty is imposed. In
claw back there is full impact on Commission. It can not be lower because total Commission paid is recovered.
Every effect rather total effect is present. hence c option is ruled out.
B ह इसक सह जव ब ह ग । No claw back will result into Higher commission will be the right answer.)
65. Mr x served an organisation fr 20 yrs 2 months with salary Rs 20000 pm @ the cessation of service 0.5 is a
fraction applied on salary fr each year of service. calculate the gratuity payable to Mr x?
A) 2 lac B) 1 lac C) 4 lac D) 40000 E) 20000
ANS- A. 10000×20=200000. Gratuity is paid in accordance with gratuity act 1972. it is payable only if the
employee has put in 5 years of continuous service. It is paid 15 days salary(Basic+DA) for each completed year of
service subject to maximum Rs 1000000 which was previously 350000 maximum.
Completed service 20 years. Salary 20000 per month. 20 ×.5=10×20000=200000
.5×20×20000=200000
66. Premium will be higher for

a) women smokers aged 45 b) men smokers aged 45 c) persons at age 35
Ans. A. Premium will be higher for women smokers age 45
67. Rent expense is

1) procurement expense 2) intial expense 3) renewal expense 4) direct expense
Ans. 3. Rent is renewal expenses
68. Is there any retention limit by insurer or according to their financial position retention limit ?
ANS- Retention is fixed by insurer himself not by any other person. It depends on experience and financial
position /soundness of the insurer.
69. Mortality probability at age 50 is 2%, at age 51 is 2.1%, what is the chance if survival of a 50-yr-old till age 52?
a. 95.86 b. 98 c. 95.14 d. 95.94 e. 95.90
Ans. d (100 - 2% = 98, 98 - 2.1% = 95.94)
69. agents are renumerated by

A) cash only B) payment of kind only C) cash, sponsored gift & payment of kind
Ans. C
70. Which policy has less medical underwriting

A) Endowment B) Traditional C) ULIP D) Annuity
Ans. D
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71. Calculate first yr premium for sum assured 7500000. Annual level premium 15000. Initial cost 5000. Cost
1.5% per 1000 of SA. Per Policy Exp. 500
Ans. 7750. (5000+15%f 15000+1.5% f 7500000+500)
72. The main purpose of including commn details in documentation to clients to increase
A) Competitiveness B) Efficiency C) Flexibility D) Transperancy
Ans. D
73. Concept of insurance involves a transfer of

A) Liability B) Needs C) Ownership D) Risk
Ans. D
74. A 15 year term ins. of Rs 1 lac sum assured, the annual premium is Rs 3179, if the interest rate is 7%. If the
interest rate is 9%, what would be the annual premium.
1) 3000 2) 2719 3) 3125 4) 3406
Ans. 2. 3179 x (1.07)^15 / (1.09)^15 = 2407.99=2408. Since 2408 is not given in options, nearest option is 2.
75. In ULIP of SA 200000, on death in 5th policy year, if Prem paid, amount payable on his death is
1) 250000 2) 200000 3) 100000 4) 225000 5) none
ANS- 2. In ULIP, the insured may die in any year of term of the policy, his heirs shall get only sum insured under
the policy + NAV of the purchased units ------ if given in options, otherwise sum assured only.
76. An ins. co. has sold 25000 ins contracts to 45 yrs old male individual with one yr term. Assuming mortality
rate of 1.5%. What will be pure Premium assuming total SA of 1000000 for exemption
A. 5000 B. 15000 C. 1500 D. 10000 E. None
Ans- B. Pure premium is the premium which meets out total claims.
total sum assured is 1000000, 25000×1.5%=375, 1000000÷25000=40, 375×40=15000 answer
77. Doctor’s limit for medical check up is fixed by A) Insurers B) IRDA C) Govt.
Ans. A
78. If annual level premium for 15 yr term assurance policy is Rs 15000 considering the SI of Rs. 6.50 lac what will
be the loading for first year exps. in the exps. equation considering cost of procurement as Rs. 6000 initial
premium related expnses as 15% of annual premium and expenses per 1000 of S A as Rs. 2, per policy expenses
as Rs. 750?
A 24000 B 22000 C 19500 D 25000 E non of d above
Ans. E - 6000+(15/100)*15000+(2/1000) *6.5 lac + 750 = 10300
F = I + x% of P + C + K (F first year exp, I cost of procurememt, P initial exp - 15% of annl prm, C expenses - Rs 2
per 1000 of SA, K per pol exp)
79. With discount policy has premium of 12500 with discount as 7%. Has discount rate been 10% what would
have been new premium.
A. 12159.09 B. 11259.09
ANS- A.
80. Difference between survival benefit and maturity benefit?

ANS- Survival benefit is a benefit which a insured gets on survival after an already fixed term, which is pre
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decided. Maturity benefits are inclusion of vested bonus + Rider benefits, if any.
81. A policy requires an annual premium of Rs.1200 and the policy will develop a cash value. What kind of policy
is this?
1) term life assurance 2) traditional whole life 3) traditional endowment
ANS- Traditional whole life. Trafitional whole life is such a policy which develop a cash value with passage of
time and the money is paid to the nominee or legal heirs, as the case may be which becomes substantial amount
After the death of the insured only. Actually ulip is a policy which develops cash value with passage of time. But
that is not in options. Hence traditional whole life seems to be suitable options.
82. Whether there is difference between whole life assurance policy and traditional whole life policy?
ANS- No
83. Life insurance business means business of effecting contracts of insurance upon including any contract
A. Product B. Human life C. Event D. Happening
Ans. B (human life)
84. Where some benefits are either wholly on partially determined by reference to an index on to the value of or
to the income from assets of any description?
A. Life insurance B. Linked long term C. Annuities D. Pension
Ans. B
85. A group insurance contract is a contract

A. Short term contract B. Long term contract C. Annual contract D none of above
Ans. D
86. Which group is homogeneous

A. Non conventional group B. Conventional group C. Both A and B D. none of above
Ans. B (Conventional)
87. Which one is true
A. If an insurer does not receive prem. in respect of some member/s in group insurance contract
A. Insurer cancel the whole cover
B. Insurer extend the cover to the said member/s
C. Insurer may not extend cover to the said member/s
D. None of above
Ans. C
88. In group contract minimum size of individual members is

A. 50 B. 100 C.150 D. 200
Ans. A
89. Life insurance business included some indemnity type contracts with some upper limit. Which of the
following in not part of it?
A. Health insurance B. Accident insurance C. Assurance D. Investment linked contracts
Ans. C
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90. Life insurance is usually divided into 2 broad categories
A. Health insurance B. Assurance C. Sickness insurance
D. Annuities E. Investment linked contracts F. Accident insurance
1) B 2) A & B 3) B & F 4) B & D 5) B & F
Ans. 4 (B & D)
91. An individual wishes to invest Rs 20000 in equity fund, NAV on that particular day for the fund is Rs.50. How
many units will he be allotted
A) 500 B) 300 C) 400 D) 1000
Ans. C
92. In pension schme when the pension amount is known beforehand it is known as
A) guaranteed benefit pension scheme B) group superannuation
C) defined contribution D) defined benefit scheme
Ans. D
93. If policy holder wants to shift existing investment from an equity fund to a debt fund it is known as
A) transfer of funds B) switching C) Redirection D) none
Ans. B
94. Date from which the annuitant starts receiving regular income is known as
a) defered date b) immediate date c) vesting date d) commuted date
Ans. C
95. The same plan may be called by diff. names by Insurer. True / false
Ans- True
96. In unit linked products, mortality risk is always with

1. policyholder 2. insurer 3. regulator
Ans- 2
97. Risk of suffering disability is which type of risk:

A. Homogeneous B. Speculative risk C. Fundamental D. Financial E. None
Ans- C. Financial related wth finance. Speculative risk gambling. Homogenious is not a type of risk. Death illness
disabilty etc comes under fundamental risk
98. Interest earning will cause the premium to
a) will not affect the premium b) increase or decreases will depend on the type of product
c) increase d) decrease
e) increase or decreases will depend on the type of interest earning
Ans. E
99. Kind of policy the employer can take for the benefit of employees is called policy
a) Employees benefit b) Group c) Group Mediclaim d) None of the above
Ans. B
100. What is the basis of contract between the policy holder and insurer
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a) Proposal Form b) Insurance Act c) Regulator Act d) All of the above
Ans. A
101. What is the maximum size of the group in Life Insurance

a) 200 b) 50 c) 500 d) None of the above
Ans. D
102. Single policy issued as an evidence of contract of group coverage is called policy
a) Group b) Master c) Individual d) All of above
Ans. B
103. A company sold 2000 insurance policies, expects 10 claims on the policies, amount of total claims
Rs.270000/-. Calculate Pure Premium the company charge from each of these 2000 policy holders.
a) 2700 b) 270 c) 135 d) 275 e) None of above
Ans. C
104. Information not declared which can nullify the policy is called
a) Vital b) Important c) Material d) Critical e) None of above
Ans. C
105. Main role of an underwriter in a non life insurance co. is

a) to assess the acceptability of the particular risk b) to certify a loss when claims are submitted
c) design the structure of the product offered
Ans. A
106. Insurance company makes profit

a) through a profit margin loading in premium
b) by charging additional amount from the policy holders
c) by deducting a profit margin from maturity claims
d) None of the above
Ans. A
107. Skill required to understand the need of the proposer and find the best suitable plan for him is called
a) analytical b) Convincing c) Communication d) All of the above
Ans. A
108. Who designs the policy

a) Government b) Regulator c) Customers d) Company e) None of the above
Ans. D
109. In Traditional Life Insurance product, investment risk is with

a) Insurance Company b) Policy Holder c) Govt. d) Shareholders
Ans. A
110. Advantages of Reinsurance –
a) helps in reserving methodology b) helps in investment management
c) helps in designing and pricing of new product d) a & c
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e) All of the above
Ans. C
111. Factors not to determine rating of premium

a) Mode of Payment b) Underwriting Exp. c) Life Table d) Mortality Rate
Ans. A
112. Free Look period under a term insurance policy days from the date of receipt of the policy
a) 30 b) 21 c) 7 d) 15 e) None of the above
Ans. D
113. Benefit payment of x on death during the specified policy term, and 2x on survival on the date of maturity.
This type of policy is called
a) Double endowment assurance b) Whole life c) Term plan d) Double cover endowment
Ans. A
114. Behaviour of agent who tell his client that the advice given by another agent is wrong
a) Childish b) Dominating c) Non professional d) None of the above
Ans. C
115. Ceding Commission is described as

a) Commission paid by the reinsurer to the insurer b) Commission paid by insurer to insurance agent
c) Claims paid by the reinsurer under reinsurance treaty
Ans. A
116. Total Policies 2000. No. of claims 10. Total claims outgo Rs.2,70,000/-. Calculate Premium.
a) 18 b) 135 c) 270 d) 1350
Ans. B
117. In a RBC regime, capital requirement as per RBC Rs.500 crores and RSM as Rs.400 crores. How much more
free assets, the insurer should have to meet the required solvency margin?
a) 100 crores b) 250 crores c) 200 crores d) 900 crores e) None of the above
Ans. A
118. For cancer which rider is useful

a) Permanent Disability Rider b) Accident Rider c) Critical Illness Rider d) None of the above
Ans. C
119. Commission is paid to the insurance agent by

a) Policy Holders b) IRDA c) Govt. d) Insurance company
Ans. D
120. In order to fulfill the KYC procedures, at what stage in the financial planning process is the insurance agent
most likely to request a copy of the customer’s photo
a) At the end of Fact Finding meeting b) At the end of Presentation meeting
c) At the time of Issue of Policy Document d) At the time of Acceptance of Risk
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Ans. C
121. Direct expenses are divided into

a) Initial Exp. b) Renewal exp. c) Termination exp. d) Only a & b e) All of the above
Ans. D
122. Shyam died 5 years before the end of his 30 year endowment insurance policy. What factor most likely
caused the insurer to investigate the claim using the early death claim procedures?
a) He paid the most recent premium during the period of grace
b) His original cover was accepted with premium loading on medical grounds
c) his death resulted from a most recently acquired sudden illness
d) The policy had lapsed and was revived shortly before he died
Ans. D
123. Raunak recently arranged a life ins. Policy under which he is classed as the master policyholder. This
addresses his role as
a) a creditor b) a debtor c) an employee d) an employer
Ans.D
124. When undertaking financial planning for individuals without capital, what savings need is likely to be
addressed in every single case?
a) Emergency funds b) Funds for children’s savings
c) Funds for educational costs d) House purchase funds
Ans. A
125. What key event is most likely to prevent insurers from ensuring that each insured person brings a fair
premium to the pool for the risk presented?
a) A policy assignment b) A sudden illness c) A fraudulent claim d) A steep risk in inflation
Ans. D
126. Endowment Assurance with Profit. S.I. Rs. 1 lacs. Term 20 years. Insured died in 5th policy year after
payment of 6 premiums. Bonus declaration per thousand – 1st – 40, 2nd – 45, 3rd – 40, 4th – 50, 5th – 50, 6th –
65. Total vested bonuses would be
a) 100000 b) 129000 c) 123000 d) 29000 e) None of the above
Ans. D
127. In a life table if number of survivors at age 45 is 89450. Assuming Mortality probability at the age 45 is 0.1%
and mortality probability at age 46 is 0.11%, determine no. of survivors at age 47.
a) 89262 b) 89150 c) 88875 d) 89260
Ans. A
128. Rina purchased a LIC policy on her daughter’s life and making the payment of monthly premium. The
monthly payments that Rina must make are known as:
a) Benefits and Rina is the insured b) Premiums and Rina is the proposer
c) Premium and Rina is the policy owner d) None of the above
Ans. B
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129. Interest earnings will cause the premium to
1) increase or decrease will depend on type of product 2) decrease
3) increase or decrease will depend on interest earnings 4) will not affect the premium 5 increase
Ans- 3
130. The reason for rewuirenent of solvency ratio greater than one can be described as
1. enough capital to pay obligations in case of catastrophe
2. additional protection to policy holders
3. to enable insurance company to earn more return on assets
4. all
5. A & B
Ans- 5
131. An investor holds wide range of shares if RBI announces a series of significant interest rate increase the
price of these shares are likely to
1. Increase 2. Stagnate 3. decrease 4. Become volatile 5.none
Ans. 3
132. Which is true

1. computation of actual solvency margin considers insurance risk of the business any
2. actual solvency margin means free assets of the company
3. default on interest payment is considered while calculating actual solvency margin
4. A & B
5. All
Ans. 4
133. While calculating solvency margin following is required

A) interest rate risk B) reinsurance default C) excess over ri risk D) occupational risk
Ans. A
134. Which product will have variable exp. Structure

1. participating money back 2. Health rider with term assurance
3. term assurance 4. Participating endowment
5. Unit linked insurance product
Ans. ULIP
135. Non conventional group are less homogeneous. True / false

Ans. True
136. Share holder capital is taken Into consideration while calculating RSM. True / false
Ans- True
137. Commission in single premium policy is than 1 year commission of traditional policy.
a) higher b) lower c) equal d) none
Ans. B
138. In level premium Term Assurance products, prem. for future years can be based on following parameters:
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A. Fixed Premium B. future profitability C. future exps. D. future Mortality rate E. nota
Ans- A. Level premium are always pre fixed and remain same for entire term. Office premium is the premium
which includes pure premium loaded with all expenses. Level premium is the total instalments premium ÷total
term=level premium.
139. Ambiguity in language in policy used is against

a) Broker B) Insurer C)agent D) Insured
Ans. B
140. Premium which cover both future benefit and expenses is called
a) Gross premium b) Office premium c) Net premium d) a and b
Ans. B (it s office premium which includes all loading of level premium too, + expenses+ future benefits)
141. If annual premium for a 12 year term insurance policy is Rs.15000, what will be the loading for first year
expenses in the expenses equation considering cost of procurement as Rs.5000 intial premium related expenses
as 20% of annual premium, expenses for 1000 sum assured as 1.5 and per policy expenses as per Rs.500 consider
sum assured as Rs.75lacs
a) 21850 b) 22000 c) 19750 d)16850 e)none of the above
Ans. C
142. Direct exp. are divided into
A) Intial expense B) renewal exp C) termination exp D) only A & B E) All ofthe above
Ans. D (Direct expenses are those which vary with the volume of business of the insurer and Termination exps.
are expenses incurred when the policy mature)
143. An inflation assumption will be necessary to apply to loading in respect of

a) Initial b) Renewal c) Terminal d) b & c e) all of the above
Ans. E
144. Which of the following factors are considered while arriving at commission rate
a) policy holder financial condition b) policy holder health condition
c) policy holder marital status d) any existing life cover of the policyholder
e) none
Ans. E
145. The saving benefit is linked with which of the following

A) SEBI B) SENSEX C) RBI D) Finance Deptt. E) Govt. of India
Ans. B
146. Difference between real needs and perceived needs

A) real needs are financial needs and perceived needs are non financial needs
B) real need are actual needs and perceived needs are based on clients thought and desire
C) real need identified by agent and preceived needs are identified by client
Ans. B
147. Expenses in pricing could be

A) fixed B) variable C) direct D) indirect E) all
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Ans. C
148. Which product may have variable exp. structure

A) money back B) health riders C) term insurance D) participating endowment E) ULIP
Ans. A
149. In life insurance, a life assured is known as

A. Insurer B. Insured C. Beneficiary D. None of the above
Ans. B
150. Life insurance is also known as

A. Benefit contract B. Reimbursement contract C. None D. Both
Ans. A
151. Which of the following is the highest

A. Single premium B. Quartely premium C. Half yearly premium D. Annual premium
Ans. B
152. Estimate the no. of deaths for 9 per thousand in a population of 2000
A. 9.5 B. 99.5 C. 18 D. None
Ans. C (9/1000* 2000)
153. The need for investment advice from an insurance agent normally result from what overriding key factor
A) Inability to prioritise future financial needs B) lack of market knowledge
C) Storage of available funds D) Abesence of any long-term goals
E) None of the above
ANS- B
154. Which of the following statement is correct
a) Estimation of the discount rates depends on 10 Years govt. bonded yield
b) Estomation of discount rate depends upon the duration of equity portfolio
C) Estimation of the discount rate depends upon the consequent of excess portion
D) Estimation of the discount rate depends on every ten year zero coupon Govt. bond yield
E) All the above
ANS- A
155. Which is correct

a) if a health rider is added to a term assurance product ‘pure premium’ remain the same
b) if a health rider is added to a term insurance product , ‘total premium’ increases due to increase in the
expense loading only
c) If a health rider is added to a term assurance product ‘pure premium’ increases
d) if a health rider is added to a term assurance product , profit loading may remain same
e) C & D
Ans. B
156. A permanent disability rider addition to traditional insurance plan will result in
A) increase B) decrease C) same premium D) No effect
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Ans. A
157. For a term policy with refund of premium what will be the benefit paid to the insured in case of death after
the end of term of the policy
ANS- Nothing is payable. Only risk covered is death but it occured after expiry of policy, so nothing payable.
158. Which of the following is an International Insurance Certification Body?

1) ICFA 2) IIC 3) IRDA 4) LOMA 5) ICWA
Ans. LOMA
159. Who approves the stamp duty rates

1. IRDA 2. State Govt. 3. Parliament 4. Ministry of Finance 5. Nota
Ans. 2
160. Bonus is x% of last year declared bonus. Which type of bonus.

a) Simple b) compound c) paid up d) cash bonus e) none
Ans. B
161. Recurrent single premium approach is

A) large Scheme B) All Scheme C) Small Scheme D)only for employer-employee
ANS- A
162. The concept of indeminity is based on the key principle that policyholders should be prevented from
a) profiting from insurance b) paying excessively for insurance cover
c) making false insurance claim d) insurance existing losses
e) none of the above
ANS- A
163. An inflation assumption will be necessary apply to loading in respect of

A) Initial B) Renewal C) Terminal D) B& C E) All of the above
Ans. A (At the time of pricing only inflation is taken into account)
164. Agent advise low risk product and client wants equity based product, what agent should do.
ANS- The agent should arrange for equiety base products as it is client’s money. The role of agent is upto advice
only. Decision making power rests with client only.
165. Initial expenses are those arising
A) When policy are issued B) Regularly during the policy term
C) When the policy terminates as a result of an insured contingen y D) A&C
E) None of the above
Ans. A
166. In which policy, discount rate assumption is easy - in single premium or regular premium
Ans. Single Premium
167. Under group insurance contract the insurer individual member is not a part to the contract. True / false.
ANS-True. Insured individual member is not a party to the contract.
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168. Which of the following is not a factor that influence design of insurance product
A) profitability B) customer expectation C) Regulation D) sales E) none
ANS- None. All the abovesaid 4 factors are taken into account for designing new product.
169. Group which involve no direct relationship but there exists some relationship between the proposer and
the individual members, are called.
A . formal group B. Conventional group
C. Non conventional group D. Informal group
E. Non of the above
Ans- C
170. Mortality is the most important factor for pricing of

A) Term product B) Whole life C) Endowment D) Ulip E) None
Ans- A
171. Determination of retention limit depends on which of the following

A. Insurers experience on type of product B. Insurers free reserve position
C. Insurers underwriting policy D. A and B
E. All of the above
Ans. E
172. New traditional product guidelines states the min. guarantee surrendered value would be x% of the total
premium paid excluding any survival paid if policy surrendered in 5-7 yrs. What is x?
A) 80% B) 90% C) 70% D) 100% E) None
Ans. E
173. Higher commission rate result in

A. less death claim B. lower benefits to policy holder C. less u/w requirements
Ans- B.
174. The amt paid out by the insurer under 30 yrs life ins. policy exceeded the SI plus revisionary bonus. The
excess is likely to result from
A) charges refunded B) a tax rebate C) a terminal bonus D) a frequency loading E) none
Ans- C
175. Annuity is a
A. Life ins product B. Ins. product C. ULIP product D. A and B E. All
Ans- D
176. The usual practice of estmng expnss is reltd to :

A. Premium B. Per pol. C. Per 1000 sa D. A & B E. A, B & C
ANS- E.
177. If sum of the present value of expected benifit payout is 2,50,000 and the sum of all the expenses is 80,000,
Calculate the approx amt. of sum of the present value of annual premium for a 10 yr term ins. policy
A) approx 250000 B) more than 330000 C) less than 250000 D)aprox 290000 E) approx 330000
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Ans- E
178. Which of the following is true

1. Calculation of RSM depends upon sum at risk and tech. reserves
2. Comptation of RSM required insurers insurers free assets and mortality risk among other parameters
3. RBC calculation will always need more capital than RSM calculations
4. A and B only
5. All of above
Ans. 5
179. Who among the following are proportionate reins.

1. Treaty 2. Surplus 3. Excess loss 4. 1 & 2 5. None
Ans. 4
180. Retention probability can be treated as an important paramater in determining comm. rate. True/false
Ans. True
181. Financial condition of the policyholder is an important parameter in determining comm.rates. True/false
Ans. false
182. Single premium 50000. Duration 20 yr. Term 25 yrs. Discount rate 10%. What will be the premium if
discount is 11 %
Ans. 41723 {50000 * (1.10)^25 / (1.11)^25)}
183. If the no. of survivor at age 55 is 70000, the mortality probability at age 55 is 1. and mortality probability at
age 56 is 1.25, what will be the no. of survivors at age 57
Ans. 68433 (70000 - 70000*.01 = 69300 - .0125*69300)
184. Age is 35 yrs. Money back policy for 20 yrs. Table prem. 68.70. Sum insured 30000. What will be the
monthly premium
a) 168 b) 170 c) 167 d) 172 e) NOTA
Ans. D (30000 * 68.70/1000 =172)
185. Highest annuity is payable on

A. Life annuity B. Return of Corpus
C. Life annuity 5 yrs D. 50% of spouse annuity
E. Nota
Ans- B
186. Retention will be lower in

A) Low risk plan B) Moderate risk plan
C) High risk plan D) Increasing/decreasing risk plan
Ans- C
187. In a RBC regime RBC requirement is 1200 cr. RSM is 800 cr. and ASM is 300 cr. How much more is required?
A) 500 B) 900 C) 1100 D) 2000
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Ans- B (RBC – ASM : 1200-300=900cr more required)
188. In a RBC regime RBC required is 900 cr. RSM is 600 cr.and ASM is 400cr. How much is more required?
A) 300 B) 200 C) 500 D) 1000
Ans- C (900 - 400cr =500 cr)
189. Claim expenses in case of life insurance product include expenses related to
A) Expenses related tl maturity B) expenses related to death claim C) both
Ans. C - both
190. An annuity product is one which provides benefits on the event of at a stipulated time interval
A. Death or survival B. Death C. Survival D. Death & survival
Ans. C
191. Skill required by an agent for selling best suited product to customer?
A. Analytical B. Communication skill C. Interpersonal skills
Ans. B
192. While estimating premium which of the following factors would be considered in arriving at discount rate
assumption
a) Future inflation estimate b) Future expected expenses
c) Expected default on various bonds d) A & C
e) All
Ans. E
193. which is true

A. Discount rate assumption should only consider future expected equity returns
B. Discount rate assumption should consider nature and term of liabilities
C. Discount rate assumption should consider future commission and payments
DAnB
E all of above
Ans- C is the answer. A and b are false statements
194. Which of the following is the highest

A. Single premium B. Quarterly premium C. Half yearly premium D. Annual premium
Ans. B
195. ULIP has variable exps structures. True/False

Ans. True
196. Which of the following depict the purpose of the claw back condition
a) Management commitment towards the business
b) to insure intermediaries towards in-force polices
c) to ensure proper claims underwriting in case of claim
d) To ensure proper corporate governance by the insurance co. by adhering to all IRDA regulatios
e) All of the above
Ans. B
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197. Which product may have variable expenses structure

A) participating money back B) Unit linked ins product
Ans. ULIP
198. In term insurance product benefit payout is known but time and payment is uncertain. True/False
ANS- True (कब मरो गो नह ो ो पर् ो पर मरन पर क्य िमलोोगो बो िमर् र िश पहलोो सो पर् ो हो र् ो हो ।)
199. For a 10 year 'term insurance policy' with sum assured of 5 lakhs, what will be the highest
A. Sum of yearly premium B. Sum of half yearly premium
C. Sum of monthly premium D. Sum of quarterly premium
E. Single premium
Ans. C - Sum of monthly premiums shall be highest in above question.
200. In a participating money back product back the time of payment is certain but the benefit amount is
uncertain. True/False
ANS- True
201. Longer premium paying term generally means higher commission rates. True/False
ANS- True
202. An endowment product with the same sum insured, policy terms and premium paying term will fetch
higher commission than a term insurance product in Rupees term. True/false
Ans. True
203. Premium rates for a term ins. Policy takes into account
a) Income tax b) VAT c) Interest rate d) Sales tax
Ans. C
204. In Term Ins. who carries the investment risk?

Ans. In with profit contract & participating contracts the investment risk is with policyholder and for others it
is with the insurer.
205. In Unit linked products, mortality risk is always with

a) Regulator b) agent c) insurance company d) govt. e) policy holder
ANS- C (In Unit Linked contracts investment risk is borne by purchaser of contracts (Insured) and mortality risk
with insurance co)
206. Calculate the guarantee additional amount if it is 3% on sum insured. the sum insured is Rs.100000. The
assured dies in 10 Year.
Ans. 3000
207. Which of the following are recurring expenses for regular policy?
1) Policy set up exp. 2) commission 3) u/w exp. 4) exp.related to claims 5) stamp duty
Ans. 2
208. Underwriting cost considered as:
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A) Capital expenditure B) Procurement cost C) commission D) renewal expenses E) none of above
Ans. B
209. New business strain can be defined as

A. Excess of inception date cash inflows over cash outflows
B. Excess of inception date cash outflows over cash inflows
C. Potential loss on a policy
D. B and c
E. None
ANS- B. Whenever a new policy is launched due to hiher commission and high advt expenses on publicity the
insurance co is always be in loss.cash outfllow in begining years will be much more than inflow.It means the co.
will always be in loss. This loss is called new business strain. Higher commission in starting years(40 or 35%).
210. Rajesh takes 15 yr term insurance at an age of 25 for SI of one lac. If rate of interest is 7% prem is 4000.
What will be premium if rate of interest is 5%?
1) 6500 2) 3000 c) 3500 4)2100
Ans. 1 {4000*(1.07)^15÷(1.05)^15= 5309 Interest rate decreases, premium increases, nearby premium is 6500}
211. Which of the following is an expense

a) Investment b) withdrawal c) claim d) maturity e) none
Ans. B
212. Product design should balance interests of :
a) Govt and capital market b) regulator and policy holder
c) policy holder and shareholders d) company and regulators
e) RBI & SEBI
Ans. C - Policy holder n shareholders. Regulator is a watch dog. He do not have any interest in a product. He
shall insure that interest of policy holders are taken care of at large and they should not be overcharged.
213. Real need are indentified by the inus. agents & perceived needs are indentified by the client. True/False
Ans. True
214. A significant benefit to the insured in group underwriting vs. individual is

A. Cost of coverage is lower B. Previous claims are not a consideration
C. There are no enrollment restrictions D. Members eligible for more contract period
E. None
Ans. A
215. Insurer charges premium as per experience when group is

A. Diversified B. Large C. Small D. Homogeneous E. None
Ans. B - Large
216. The risks most suited to treatment by the ins mechanism are those
A) a low probability and a high severity B) a high probability and a high severity
C) a low probability and a low severity
Ans. A
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217. The main purpose of the guaranted ins rider benefit
A) cancel health based exclusion B) increase cover when a key life event occur
C) maintain cover despite a fall in investment values D) include his parents under the value
Ans. B
218. Lapsation rate should be ........ when surrender profit is high

A. Moderate B. Zero C. high D. low E. none
Ans. D - Low
219. In pension payable to a member

A. Joint life annuity B. Immediate annuity
C. Last survivor annunity and single life annuity D. Annuity certain for n years and for life thereafter
D. None.
Ans. D
220. Higher commission rates result in to

A. Less death claims B. Lower benefits to policy holders
C. Less underwriting requirements D. A & B
E. All of above
Ans. B
221. On the maturity of endowment pol.,a reduced S.I. is paid out? What is the most likely reason
A. The pol. was subject to lien
B. The pol.was paid up during policy terminations
C. Instalments were cummuted by pol.holder
D. The pol.holder's health seriously deteriorated during pol.term
E. None
Ans. B
222. Following are the external factors beyond the control that affect their probability.
A inflation B interest rates C unemployment rates D stability f govt
Ans. A
223. Estimated cost of benefit for 10 yrs of 20 lacs policy will be highest in case of
A. Single premium with holder age 45 yrs B. Regular premium with 45 age
C. Single premium with 35 age D. Regular premium with 35 age
E. A & b
Ans. C. Single premium paid @ age f 35 will be invested in funds which yield higher return than by 45
224. which is true

A. RBC calculation considers many more risks than RSM calculation
B. RBC calculation will always need more capital than RSM calculation
C. RBC calculation will estimate technical reserve than RSM calculation
D. A & B
E. All of the above
Ans- E
Page 24
225. what is false in this
A. Computation of RSM consider s insurance risk of business
B. Computation of RSM consider operational risk of business
C. Default on the interest payments is considered while calculating RSM
D. B & C
E. Nota
Ans- A
226. Minimum allowable commission for 1st year regular term assurance:
A. 2% of premium B. 2% of sum assured
C. 5% of premium D. 35% of premium
E. None
Ans. E
227. Non disclosure can be alleged in the following circumstances

A. The fact must be known to the proposer also known to insrr
B. The fact if md known to the insrr may hv affctd the dcsnto grant cvr
C. The fact may be held back with intn to obtn btr term of in
D. B and C
E. All abv
Ans- C only
228. An ins co sells 5000 pols SA rs.50000 each pol and it expects 10 clms. What risk premiuj shd co. Charge to
5000 pol hldr each
A. Rs.121 B. 119 C. 100 D. 78 E. 10
Ans. C (50000×10=500000 /5000 = 100)
229. Pricing of ins. Product relates to

1. Income. 2. revenue 3. guidelines from ministry 4. tax 5. all
Ans. 2
230. What s consideratn on part f Insurers

A) to refund the premium n case f no loss B) promise to indemnify insured
C) both D) none
Ans- B only
231. You are eligible to receive this if you have paid premium for at least 3 years. It is 30 percent of the basic
premium paid, excluding 1st yr prem and any other prem for rider.
A. Surrender value B. Guaranteed surrender Value
C. Paid up value D. Loan on policy
E. Special bonus
Ans- A - Surrender value
232. A base ins can be attached with how many riders:

A. Max 5 B. Multiple C. 2 D. 3 E. Min 1
Ans. B multiple
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233. Pure premium can be prudently defined as
A. Cost of benefits and expenses B. Cost of benefits
C. Cost of benefits plus all expenses and profit margin D. The amt paid by insured to avail a cover
E. All expenses and profit margin
Ans- B
234. To commute we need

A. Interest rate B. Life table C. Commission rate D. A & B E. All above
Ans- D (a and b is right answer)
235. RSM means:

A. It is the excess of liability over assets
B. It is the amt required by ins. regulator as buffer
C. It is the excess of assets over liab.
D. It is the amt insurer maintain for internal contingency
E. It is the amt which paid by reinsurer to insured in case of high claim
Ans- B
236. Life ins provides coverage to risk of

A. Early death B. Dying too early or living too long
C. Living too long D. The person
E. The family
Ans- B
237. Medical u/w expenses will be highest for an individual in which of the following condition:
A. 10 yr pure endowment plan B. 10 yr endowment plan with annl prm Rs.20000
C. 10 yr term plan with annl prm Rs.3000 D. 10 yr term assrnce plan with annl prm Rs.50000
E. A deferred annuity of single prm Rs.2500000
Ans- D
238. Who is settling authorities of U/w standards in Life busnisess?

A) top management B) u/w deptt. C) Acturial deptt. D) none of the above
Ans. C
239. At 30 yrs age no. of lives 32000 mortality rate 0.031 and at 31 age mortality rate is 0.032 find survivers at
the age of 31?
Ans- 32000×0.031 % - = ×0.032% - =31979.84 answer
For 3-4 questions your answer will be in this patern only. One will be on reverse type.
× % - = × % - =ANSWER
240. Higher investment risk: Endowment term assurance annuity ULIP pure endowment
Ans- ULIP
241. Who approves health ins prodct:
Ministry of health IRDA Medical council of India Ministry of Finance None
Ans- IRDA
Page 26
242. Fill in the blanks
A. is a regular series of payments
B. When the first payment is made during the first time period this is called
C. When no payment is made during the first time period
D. If payment are made at the end of each time period they are
E. If payment are made at the beginning of each time periods
F. is on annuity payable for a definite period of time the payment do not depend on some
faction such as whether a person in alive or not
Ans. A – annuity. B – Immediate annuity. C – Deferred Annuity
D – paid in arrear E – Paid in advance or annuity date F – Annuity certain
243. In a company for a claim management are required

1) actuary 2) auditing 3) accounting 4) all of the above
Ans. Actuaries for rating, accounting for keep balance sheet, so auditing can analyze claims.
Rating,trending,modelling,fixing retention and analysing are main functions of actuary.
Actuaries are responsible for claims reserving especially for ibnr/ibner/cat/large claims.
Auditors can verify whether the claims has been registered in the system and with correct provision.
Accounts show the correct provision from system in Annual reports which helps directors in taking decision s on
claims management. this way, I think, all are helpful in claims management. Hence, the answer is 4.
244. In obsulete condition when the title is changed is it the title always lie with whom
1) assignor 2) assignee 3) both 4) none
Ans- 2 - Assignee only. Once any policy is assigned insured do not have any lien in policy benifits.
245. ULIP needs discount rate while pricing. true/ false

Ans- No, never. Unit linked is Where the premium is invested as per investers choice of funds. As per current.
Instructions locking period is 5 years.no money can be withdrawn before 5 years. Net asset value(n a we )is
published on daily basis. Units are allocated as per current value of the fund(NAV).
Ulip donot require any discount rate. In ulip some premium is charged for mortality,some for administrative
expenses and rest money is allocated for investment in choice fund. Units are allocated on current nav rates on
the day of investment. No loan admissible. If you observe that your fund is not givjng required results,you can
switch over the invested money in another fund as per your choice. But you will have to pay nominal switchover
fees for it. loan facilities are available for wjth profit Endowment policies.
With profit policies are those policies in which some extra premium is charged from client and some bonus js
paid in case of profit. this type of. Policies are called with profit policies. Ulip policies are thus investment
policies not with profit policies.
246. Commission for ULIP policies are less than or greater than other policies. ?
Ans- Less
247. Highest annuity is payable in

1. life annuity of 10 yrs 2.life annuity 3. Return of corpus 4. Life annuity of 5 yrs 5. 50% spouse annuity
Ans- 3 is the correct answer as it will be highest as per question. but it cannot be termed as annuity as it is
return of corpus which will always be highest.
248. What is the difference between return of corpus & return of premium?
Page 27
Ans- Both are same but this term is used in insurance parlence for return of premium.
loan can be taken on Endowment with profit policies. It can not be granted/taken on ulip or annuty policies. No
Loan permissible on term policies.
249. What is the meaning of corpus
Ans. Suppose a person wants annuiety (deferred) after vesting date10 years.He dies after 5 years of paying the
one. Time premium.His money is returned to the heir with some nominal interest rate ,it is called return of
corpus. Premium was booked for annuity but the insured died before vesting date and the premium paid
(single) is returned to the legal heirs of deceased insured with some nominal interest ,these circumstances are
called return of corpus.
250. In lifetable no.of survivors at age 38 are 77856 & at age 39 are 70850 what is mortality probability at age 38
Ans- 8.9986 (77856-70850=7006, 7006÷77856 * 100= 8.9986 answer)
251. Claw back commission is to penalise agents, it reduces anamolies in agency commission True /false
Ans - Claw back commision is recovery of commission from the intimidiary distributor and some financial penelty
is also imposed on that distributor because policy is no longer on the books of the insurer, it is cancelled by
insured and refund is taken. It (claw back) prompts distributors to take regular and proper care of business
introduced by them. Distributors loose commission and pay penlty imposed. If the policies introduced by them
are cancelled and refund taken. Panelise agent will be the right answer.
It ensures regular premium collection and avoid wastage of administrative expenses which will have to be borne
by insurer due to cancelation of policy and refund. As far as Insured is concerned he shall always be in loss
alongwith distributor due to surrender /cancellation of policy.
252. Please explain Guaranted surrender value, forfeiture of policies

Ans- Surrender value - Sometimes insured want to surrender the policy due to financial or other personal
reasons. He can surrender his policy and get some surrender value from the insurers.
Previously insurers were giving surrender value very less that too excluding Ist year premium
Since you all know that 1st year commission is very high(35-40%). Later in the regulator had fixed 30%minimum
surrender value for Ist 3 years and minimum 50% for 3 years to 7 years and so on Upto 90%surrender value is
fixed(minimum)by the regulagor.
If any thing material(fact)is supressed/concealed/misrepregentated the insured will forfeit his rights to recover
any loss/damage /indemnity/maturity under the policy. The main thing to decide whether any fact is material or
not shall depend on the factor whether it effects the decision of a prudent underwriter to accept or decline the
business. If accepted on what terms and what rates?
Paid up policy - Sometimes insured is not in a position to pay premiums in future also.and he also wants that his
policy should also continued ---- not be cancelled. He requests the co. to continue his policy as it is in such a
situatjon he is allowed to continue. And in case any claim occures under this policy which is now called paid up
policy ,shall be dealt by the insurer as under:-
Suppose sum insured was 200000. Total instalments were 20. Instalments paid 15. Claim amount admissible
will be 15÷20×200000=150000
254. Life assurd age 35 for a policy of Rs 30000 SA under money back policy for a term of 20 yrs DAB and EPDB
are not required. tabular premium per thousnd is given as Rs 68.70 if the policy is under salary saving scheme
what would be the monthly premium?
a) 172 b) 170 c) 168 d) 167 e) None of above
Ans- 35×68.70÷12=171.75=app 172 answer
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255. What is URR. IBNR+URR+O/S reserve is called Technical Reserves.

Ans. URR is unexpired risk reserve. As per IRDA every insurer has to keep reserve for policies which have not
expired at the close of the accounting date. All these three are called Technical Reserves
256. An insurance company makes profit

a) Through 'a profit margin' loading in premium b) by inflating the expenses
c) by charging additional amount from the policy holders
d) by deducting a profit margin from maturity claims e) None of the above
Ans. A
257. Variable expnses structure availble in money back policy? True/false
Ans. True
258. ULIP are market linked insurance plans and combine the features of
A) investment & saving B) investment & protection C) annuity & protection D) savings & protection
Ans. B
259. What is the minimum no of years a policy must be kept to be able to get surrender value in traditional plan
A) 2 year B) 1 year C) 3 year D) 5 year
Ans. C ( 3 years)
260. What is it known as when lapsed policy is made active again

A) policy activation B) revival C) survival D) renewal
Ans. B (Revival)
261. Additional loan amount generally granted should not exceed what % of surrender value
A) 80% B) 90% C) 100% D) none
Ans. B (90%)
262. In Insurance market, is exchange for future benefits

a) S I b) policy c) premium d) money
Ans. C
263. Recurrent of regular premium policies commission

A) maximum B) minimum C) Uniform D) moderate
Ans. B
264. In what terms the risk of suffering a dibetes is best described as what type of risk?
A. fundamental B. speculative
Ans. A
265. Premium loaded with expenses is called

A) gross premium B) office premium C) direct premium E) none
Ans. B (Net or pure premium is called office premium)
266. Pension policies contract provide benefits of
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A) pre and post retirement B) post retirement C) Pre retirement D) SI
Ans. B
267. No medical examination is required in which case 1. Annuity policy 2. Group policy 3.Both case
Ans. 1 annuity
268. While estimating premium which factors are considered in arriving at discount rate assumption.
A) current interest rate scenario. B) future expected interest rate to invest future premium.
C) future inflation estimate. D) B and c.
E) All the above
Ans- E all of the above
269. An agent has recommended an investment proposal with non guaranteed benefits. The benefits illustration
passed to his client. Will therefore use assumed annual growth rates of
A) 5 and 10% B) 6 and 8% C) 6 and 10%
Ans- B. Non guaranteed means interest rate risk with investor. He expects higher interest return than bank rates.
Generally higher means at least 6 to 8% minimum but perhaps more than that too.
A. 2% of premium B. 2% of S.A. C. 5% of premium D. 35% of premium E. None
Ans- E.
271. Which of the following statement are correct i.r.o. investment income and pol.holder
A. Higher investment income means higher investment returns for a with profit policy holder
B. In a term ins pol, higher investment income doesn’t result in lower premium
C. Investment risk can be reduced by investing more in equities than bonds because equities are supposed to
earn higher returns
D. A & B
E. A & C
Ans- D
272. Which of the following is false

a) investment risk can be reduced by investing more in equities than bonds because equities are supposed to
earn higher return
b) higher investment income mean higher investment return for a with profit policy
c) in term ins policy higher invt income doesn't results in lower premium discount rate assumption is immaterial
to the policy holder
d) b & c
e) a & b
Ans. C
273. Which of the following is not a role of an actuary

A. Claim settlement B. Pricing C. Product design D. Financial Management E. All abve
Ans- A is not his work
274. If the risk assessed is greater than standard, it is known as

A. High standard risk B. Sub standard risk
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C. Preferred risk D. Favourable risk E. Acceptable risk
Ans- E only
275. The drive or urge to do something to achieve an end is called:

a. need b. Motivation c. Power D. Willingness E. None
Ans- D is the correct answer.
276. What metrics is used to define the ability to identify the no. of individuals getting sick and how much money
will be spent on their treatment
A. Mortality rate B. Incidence rate C. Morbidity rate D. B and C E. All above
Ans- D is correct answer
277. In a group gratuity contract, Benefit is related to:

A. Profit of the employr B. Length of service C. Salary of member D. Only 2 and 3 E. All
Ans- D
278. Identify the odd one:

A. Convertble term ins B. Accident benft C. Permanent disability D. Critical illness E. Legal liability
Ans. E legal liability. All r riders except E
279. In reinsurance arrangement, arbitrage is known as..

1.Non proportional reinsurance 2.facultative reinsurance
3.treaty reinsurance 4.financial reinsurance
5.proportional reinsurance.
Ans. 4
280. A policy requires an annual premium of Rs.1200 & will develop a cash value. What kind of policy the
statement describing:
A. Term life assurance B. Trdnl whole life
C. Trdnl endwmnt D. Pure endwmnt
E. Increasing term ins
Ans- B
281. Financial condition of the policy holder is an important parameters in determining the commission rate
True or false
Ans. - False
282. Identfy the group ins contract, under which contributions are pooled in a fund and fixed and specified
benefits are paid out in the form of funds
A. Grp savings linked ins contract B. Grp super annuatin cont
C. Grp trm contract D. Grp mutual bnft cont
E. Gratuity
Ans. E Gratuity. Superannuation is also same method know.
283. The kind of pol an employer can tk for the bnft of all his employees is called
A. Superannuation pol B. Master pol C. Group pol D. Employee benft pol E. Gratuity pol
Ans. - C
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284. While estmtng prm, which factors r consdrd in arrvng at disc rate assumption:
A. Current interest rate scenario B. Future expected int rate to invest future prm
C. Future inflation estmate D. B and C
E. All the abv
Ans. E
285. What is the minimum surrender value that you will get if u have paid Rs.30000, annual premium for 4 yrs
for sum assured of Rs.500000.
A. 120000 B. 90000 C. 36000 D. 27000 E. 150000
Ans- D 27000
286. In life table if no.of survivors at age 45 is 89450.assuming probability at age 45 is 0.1% and mort. probality
at age 46 as 0.11determine number of survivors at age47.
A 89262 B 88875 C 89250 D 89150 E 89260
Ans- 89450×0.1%= - = ×0,11%= - = answer
89450×0.1=89.45. - =89360.55×0.11%=98.29. - =89262
287. Experience rating suitable for smaller group. True / false

Ans- False
288. If in a single premium term insu pol, sum of axpecyed payout and expenses is rs.250000/-released at the
end of term and duration of liability is 18 yrs, what will be the single premoum assuming discount rate is 9%.
Ans- 250000÷(1.09)18=उत्र् र
289. interest rate changes affect to

A) annuity B) endowment C) single premium D) 1&2 E) all
Ans- E .means all is the answer
290. Estate planning s before or after retirement

Ans- estate planning means as to whom me which estate to go after my death. It is called estate planning as per
financial management. Estate planning stage comes after retirement only.
291. What is the connection between int rate and single prm.
Ans- We give discount for the interest rate to arrive at net premium to be chaged. It may be single
may be regular that makes no difference You have to give discount to client for interest rate presumption which
is primary task of an actuary. This is the only and primary connection which results into premium decrease or
increase. Net premium to be charged.
292. Who Is regulator for long term policies?

Ans - Regulator is only one in india for insurance. it is insurance regulator for insurers & called IRDA and its
headquarter is at hyderabad.
293. Lapsation ratio should be

a) Minimum b) Maximum
Ans- Minimum
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294. Mortality rate in new life table compared to existing will b
a) Higher b) Lower c) Equal d) Nota
Ans- Lower Due to advancements in health field life span is increasing day by day hence death rate decreasing in
comparison to present life/mortality table.
295. Variable charges r applicable to ULIP & money back True / false
Ans- No Ulip only
296. While estmtng prm, which factors r consdrd in arrvng at disc rate assumption:
A. Current interest rate scenario B. Future expected int rate to invest future prm
C. Future inflation estmate D. B and C
E. All the abv
Ans. E - All the above
297. Mortality factor is the most important factor for pricing of

A ULIP B whole life C term product D endowment E none
Ans. C
298. Which medical examntion is never required whatever be the S.I.

A group insurance B term C endowment D annuity E none
Ans. D. No medical checkup is required for annuity.
299. Bank can sale insurance policy for how many insurance cos.
A) 1 life & 1 gen B) many C) 2 life & 2 gen D) 3 life & 3 gen
Ans. Many
300. Which of the following terms matches closest with foreclosure

A) maturity claim B) death claim C) nominee D) surrender value E) bonus
Ans. D
301. Renewal expenses are

A) when policies are renewed well in time to maintain business portfolio B) regular during policy term
C) when policy terminates as result of insured contingency D) a and c
Ans. A
302. What is paid up policy?

Ans. When an insured is unable to pay premium any more, he requests insurance co. to continue his policy for
the rest term of the policy, his policy is allowed to continue by insurance co but for proportionate Sum Insured
for example S.I. 100000. Term 20 years. Premium or annual Instalments paid 10. Total instalments 20. Benefit
on maturity will be 100000×10÷20=50000
303. In traditional endowment policy, the investment risk is with the
a) insured b) insurer c) share holder d) policyholders e) proposer
Ans. B (Investment risk for traditional policies with insurer)
304. Stakeholders’ concern need to be addressed by

A) regulator B) insurer C) govt. D) None
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Ans. B
305. A person appointed by insurance council to attend the grievances of policy holders is called?
Ans. Insurance Ombadsman
306. Which is protection plan

A) term insurance B) endowment C) annuity E) all
Ans. A
Remember Term pure term ins. covers death risk only. If person dies,sum assured is paid otherwise if survive
the term premium is forfeited.
Pure endowment ass. covers survival risk only. If person dies during the policy term nothing is paid, premium is
forfeited. If survives the term sum assured is paid as maturity.
Double endowment assurance means - payment of 2 x on survival and x if death takes place during the term of
policy.
Double cover endowment assrance means - payment of 2 x in case of death of assured during the term of the
policy and payment of x if he survives the term of the policy.
307. Which of the following will have highest rate risk?

a) annual premium 5 yrs term ins pol b) annual premium 10 yrs term ins pol
c) annual premium 15 YRS d) Single premium 5 yrs
e) single premium 10 Yrs
Ans. Higher commission rates means lower benifits to policy holders. Single premium 10 years will have highest
interest rate risk. The interest rates may change frequently ,therefore single premium for longer period will
have highest interest rate risk. All annual premiums for shorter periods have lowest interest rate risk. Annual
premium is recd and invested on yearly basis therefore carryies lower risk.
308. Annuity cover benefits of A) Death B) Survival

Ans. - Survival only. Annuity whether immediate or deferred stops from the date of annuitent's death.
309. Processing of recording correct age is

A age admission B proof of age C verification D certification E none
Ans. A- Age admission
310. To achieve something you need

1) motivation 2) power 3) need 4) all of the above.
Ans. A
311. Group superannuation scheme in conjunction with group insurance scheme is taken
A) to ensure that even in the case of premature death, the employee's widow gets reasonable pension
B) to meet statutory requirement
C) to offer group insurance protection
D) non cohesive
E) all
ANS - A
312. As per Indian regulation calculation of RSM depends upon
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1) techical reserve 2) shareholder capital 3) some at risk 4) 1&3 5) all of above
Ans. 4
313. Direct expenses include terminal expenses .true/false
Ans. True
314. Pricing of term assurance policy take into account

A) cost of death benefit B) cost of expenses C) investment return D) all the above E) A & B
Ans. E
315. In a annuity products the benefit payout stop when premium payment stop. true/false
Ans. False. It stops with the death of annuitent.
316. Benefit payment of 2X on death during the specified policy term and X on survival on the date of maturity.
Ans. Double cover endowment assurance
317. The process of recording the correct age of the person insured is called
Ans. Age admission
318. Pension required by a person is minimum for 10 years and after than he alive what annuity policy is suggest
Ans. Annuiety for n yrs and whole life thereafter
319. Mr.rajesh purchased a policy for himself, wife and his 2 childern aged 14 & 7 years. He will get income tax
rebate for
Ans. All
320 ---------- means list of person whom an agent to procure.

Ans. Prospectes
321. What is the formula for solvency ratio

Ans. ASM÷RSM
322. Concept of insurance involved transfer of ---------

Ans. Risk
323. What happens to S.I. once the lien period expires.

Ans. Remains same
324. Annuity product do not give benefit in the form of

Ans. Lumsump or maturity
325. Clow back commmission reduce or increase lapsation or cancellation of policy number
Ans. Claw back is a financial penelty on distributor. It is imposed when a policy is cancelled and refund is taken
by the insured & it do not remain on the books of the insurer. It is called as a claw back of commission. It reduces
policy lapsation since it attracts the distributors to take interest in continuation of the policy. Otherwise
financial penelty in the shape of claw back of commission.
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326. Medical loading/inflation loading on
1) 1st year premium 2) renewal premium 3) terminal premium
Ans. 2
327. When the premiums are returned to the nominee:

A. On expiry of annty product B. Any time drng the currency of policy
C. If the assrd dies drng the drmnt product D. Prms r nvr rtrnd
E. All above
Ans- C only
328. How much of % of ones salary can be spent on insurance?
Ans. - Normally 30% of gross salary.
329. Which of the following will be having the highest interest rate risk?
A) An annual premium 5 years term ins. Policy B) An annual premium 10 years term ins. Policy
C) An annual premium 15 years term ins. Policy D) A single premium 5 years term ins. Policy
E) A single premium 10 years term ins. Policy
Ans. – E. Since the period of investment is longest. Premium is single means longest period in all options. Being
longest and maximum amt due to single premium investment will be one time only that too for longest period
available in options. Therefore it will carry highest interest rate risk. Maximum the period of investment
maximum the investment rate risk. Nobody keeps the money with them due to time value of money. Moreover
single premium means premium of all the term in single instalment. Shortest the period of intalments all other
things being equal shall have lowest investment rate risk.
330. Medical underwriting expenses will be highest for

1) 10 yr pure endowment plan 2) 10 yr endowment plan with annual premium 50000
3) 10 yrs term plan with annual premium 50000 4) life annuity after 10 yrs
5) 2 & 3 having same underwriting consideration
Ans. 3. Sum of monthly instalments shall be highest. Term insurance covers mortality risk. Endowment covers
survival risk. Insurer would like to know the health position of the proposer to evaluate that whether he is
healthy or not? Since the insurer would like to know the probablity of death of the person to whom he is going
to underwrite for death risk only. Therefore medical underwriting exp. will be highest.
331. Which is true?

A. Term ins product, the cost of benefit is small in the equation of premium determination because overall
mortality rate is low.
B. Pure prm is the sum of future exp benefit payouts increased by expected investment income.
C. In an annuity product, the beneft payouts stop when premium payment stop.
D. B and C
E. None
Ans. – None
332. What key impact will low persistency level have on an insurance policy holders?
a) an enhancemnt in product choice b) an improvemnt in investment performance
c) an increase in insurnce cver d) a reduction in benefits
Ans. A reduction in benefits.
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333. An insurance agent has adviced a client to surrender an existing investment product and start a new
invstment product. What key indicator should be used to determine whether this advice was ethical?
a) the best interest of client
b) the difference in potential income & capital growth b/w the 2 products
c) the flexibility of the new product compared to the old one
d) the views expressed by the client
Ans. A Inthe best interest of client.
334. Computation of RSM for a life insurer consider:

A. Share capital of insurer B. Tech. Reserve C. Mortlty risk of insurer D. B & C E. All
Ans. B and C means D is the answer. RSM do not have any connection with share capital.
335. In Anticipated whole life assurance the amount is payable

A. On death only B. On maturity
C. At regular intervals D. On death as well as at regular
E. Such product is not available
Ans- D.
336. Which of the following recurring expenses for regular premium
A. Pol set up exp. B. Commission C. U/w exp. D. Exp related to claims E. stamp duty
Ans- B. Commission is the only recurring exp. Out of above expenses
337. In which of the following products, would the pol. holder expect highest returns:
A. with profit B. Without profit C. ULIP plans D. A & C E. All
Ans- D only
338. Factors affecting the expected volume of life ins business:

A. Competitor’s rate B. Age and income of profile C. Availability of similar product D. A & B E. All
Ans- E is right answer.
339. If min. prem. is higher, the life insurer will get:

A. Higher vol. of life ins policies B. Lower volume of life ins policies
C. Wl not affct the life ins policies D. Cannot say E. A & C
Ans- B only
340. Under which annuity pol a couple can take the annuity:
A. Joint life annuity B. Reversionary annuity policy
C. Last survival annuity D. A & C E. A, B & C
Ans - D (a& c)
341. In RBC regime RBC is 400cr. RSM is 350 cr. Asm is 300 cr. How much more is required by the company
Ans. 100 cr
342. Policy holders expenses relates to

A. Procurement exp B. Uw exp C. Admn exp D. Legal exp E. Misc exp
Ans- A
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343. Which expense is not a renewal expenses
A. Stationary B. Maintenace of records
C. Issue of premium notices & receipts D. Cost of collection of premium
E. Rent, taxes etc
Ans- A
344. Cal the guarantee adfns amt if it is 3% on sum assrd. The SA is rs.100000 . The assrd dies in 10th yr.
A. 30000 B.130000 C. 1 lac D. Data is insufficient E. 133000
Ans- Data is insufficient.
345. Commisn will be lower in

A. Term ins B. Regular prm pol C. Single prm pol D. Endt E. None
Ans. D
346. What is vesting date:

A. The date on which the Assurance begin B. The dt on which pol begins
C. The date on which assrd dies D. The dt is exactly mid of the trm of pol
Ans. A
347. Which of the following is not a types of group insurance contracts generally offered?
A. Group Saving Linked Contract B. Group health insurance contract
C. Group term insurance D. Group gratuity contract
E. None of above
Ans- A is the right answer. GSLIP is not generally offered although it is a group policy.
348. Which one of the following is not a group for insurance purpose
A. Trade Union B. Group of Individuals C. Group of Employee D. Club E. None of the above
Ans. B
349. If RBI increases significant int rates in the market & if mr.A posses variety of shares the val of share:
A. Increases B. Decreases C. Stagnant D. Constant E. NOA
Ans. B
350. The Reasons for requirement of solvency ratio greater than one can be described:
a) enough capital to pay obligations in case of some catastrophe.
B) additionsl protection to policyholders.
c) to enable insurance comp to earn more returns on assets.
d) all of above.
e) A&b
Ans- E means a and b
351. Surplus n a valuation arises bcz f favourable experience in

A. interest yield B. mortality C. expenses D all the above
Ans. All of the above
352. 20000 lives to be insured in the 5th fnl years by LIC In which sector
a) social b) poorer c) farmers d) rural e) none
Page 38
Ans- Social sector
353. Factors to be considered in choosing a rate

A. Default that could arise in investment in respect of income & sales proceeds
B. Available matchng investment which could be govt. paper, corporate paper, equity, property
C. Past exp of rate of int & the economy from each type of investment
D. B and c
E. A, B and C
Ans- E
354. When does foreclosure action begin

a. The premium is not paid b. When loan and interest accumulate
c. When policies surrendered D. All of above
Ans- B
355. In a life table ,if no of survivors at the age 30 is 91250. Assuming the mortality probability at age 30 is 0.09%
and mortality probability at age 31 is 0.1% determine no of survivors at age 32
A) 90500 B) 89500 C) 90769 D) 91077 E) 89769
Ans- D (91250×0.09%= - = ×0.1%= - =answer)
356. Which is true.

1. In formula method of calculation of premium, expected benefits payouts & discount at discount rate
2 in a lifetable at any age sum of probability of death and probability of survival is equal to 1
3 generally mortality rate increase with increase in age
4 A & C.
5B&C
Ans- 5.B and c is answer
357. In RBC regime if RBC 800 crores and RSM 600 crore. Find free assets required if RSM is 1.5
Ans- If regime RBC, you have to concentrate on ASM only. Reduce it from RBC requirement. What more is
required will come before you.
358. Which of the following statement is false
a) Solvancy margin can be defined as the margin by which assets exceeds the technical reserves.
b) Computation of risk based capital considers only the operational risk as other risks are already captured in
technical reserves calculation
c) If minimum solvency ratio is prescribed as 1:5, it means solvency margin should be at least 1.5 times required
solvency margin.
d) A and B
e) all of the above
Ans. D) A&b only
359. With improvement in mortality rates, pure premium for annuity products will increase. True or false
Ans. True
360. Which one is correct

A. RI rate play important role in product pricing
Page 39
B. RI doesn’t play important role in product pricing
C. interest rate play important role in product pricing
D. intrest rate doesn’t play important role in product pricing
E. a and c
Ans. is E
361. Which of the following terms matches closest with foreclosure

A) maturity claim B) death claim C) nominee D) surrender value E) bonus
Ans. D
362. In traditional endowment policy the investment risk is with the

a) insured b) insurer c) share holder d) policyholders e) proposer
Ans. B
363. Stakeholders concern need to be addressed by

A. regulator B. insurer C. govt D.None
Ans. Stakeholders concerns need to be addressed by insurers.
364. In mathematical terms the cost of benefit is the

A. expected value of benefit. B p v of benefit
C future value of benefit D calculated value of benefit
E general value of benefit
Ans. B
365. If the pol surrendered in fourth yr what will be the surrender value
a) 40 b) 50 c) 60 d) 70
Ans. 3 years its 30% and 4 to 5 year its 50%
366. Which product may have varible exp. Structure

A money back B health riders C term ins. D participting endomnt E unit link insur product
Ans. A
367. Which of the following depict the purpose pf the claw back condition
a)Management commitment towards the business
b) to insure intermediaries towards in-force polices
c) to ensure proper claims underwriting in case of claim
d) To ensure proper corporate governance by the insurance co. by adhering to all IRDA regulatios
e) All of the above
Answer is B
368. A 15 yr terms insurance of ra 1.00 lac sa the annual prem is rs 3719 if the interest rate is 7% however if the
interest rates is 9% what wd be the ideal ann prem
a) 3100 b) 2819 c) 3125 d) 3406 e) 3519
Ans. B = 2819 = 2.759÷3.642=0.7575*3719
369. Life insrance is also known as

A. Benefit contract B. Reimbursement Contract C. None D. Both
Page 40
Ans. A
370. Estimate the no. of deaths for 9 per thousand in a population of 2000
A. 9.5 B. 99.5 C. 18 D. None
Ans. C = 18 = 9/1000* 2000.
371. If in a single premium term insurance policy sum of the expected benefit payouts a nd exp is 200000
released at end of term and duration of liability is 14 yrs wht will be the single premium assuming discount rate
as 8%
a) 75000 b) 68240 c) 62238 d) 60200 e) 58859
Ans is 58740. Its very much near to 58859
372. Which of the following statement is correct

a) Estimation of the discount rates depends on 10 Yrs govt. bonded yield
b) Estomation of discount rate depends upon the duration pf equity portfolio
C) Estimation of the discount rt depends upon the consequent of excess portion
D) Estimation of the discount rt depends on every ten yr zero coupon.Gove bond yield
E) All the above
Ans. A should be the correct answer.
373. Which of the following st is false

A) computation of RSM considers insurance risk of business
B) Computation of RSM consider opertional risk of the business
C) Default on the interest payment is considers while calculating the RSM
D) B and C
E) none of the above
Ans. D
374. A person aged 20 yrs insured under a 15 yr pure term ins. Pol. For 200000 vested bonus is 22000 he dies at
37 what amount nominee will gwt
Ans. Nothing will b pd since it s pure term. Died after the term
375. persons alive at the age 40 were 77225, death rate was 0.040 And death rate at the age 41 was 0.041.
Find the persons survived at the age42?
Ans. 71096 (77225×0.040=3089, 77225-3089=74136, 74136×0.041=3039.57, 74136-3030.57=71096)
376. There were 10000 persons in a village x. In a year 100 persons died. Find the death rate of that year.
Ans. 100 ÷10000 × 100 =1%
377. Policy term assurance, Sum assured 2500000, Term 25 years, Duration 20 years, Premium 200000 for which
discount rate already taken into account is 7%. What will be the premium if discount rate becomes 9% ?
Ans. 200000×(1.07)^20÷(1.09)^20 = 138091.49
378. Policy pure endowment, Sum insured 100000, Term 15 years, Duration 10 years, Premium 40000. What will
be premium if the discount rate is 4%.
Ans. 40000÷(1.04)^10 = 40000÷1.4802 = 27023
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379. In a policy sum assured is 200000, Premium is 90000, Term 15 years, Administrative exp.3% of the sum
assured. Renewal exp.4% of the premium. Per policy exp. 450 Legal exp 2% of sum assured. Procurement exp.
3% of sum assured. Find the total expenses on the policy?
Ans. Admn exp. 6000 + Renewal exp 3600 + Per pol. 450 + Legal exp. 4000 + Procurement Exp. 6000 = 20050
380. Policy pure endowment, Sum insured 200000, Term 15 years, Policy inception date 1.1.2000. Insured died
on 1.1.2014. What will be paid to legal heiers?
Ans. Insured died within the term 15 yrs. Nil as pure Endowment covers survival risk only.
381. Policy pure term, Term 10 years, Premium 30000, Sum assured 100000, Inception date of policy 1.1.2000.
The insured died on 1.2.2010. What will be paid to legal heires?
Ans. Nil as term assurance covers death risk only.
382. Policy money back, Sum assured 420000, Term 20 years, After 5 years of survival, 10 years of survival, and
15 years of survival 84000,84000 and 84000 are returned to insured. Insured died in 16th year in a motor
accident. What his legal heires will get?
Ans. In money back both risks are covered, 84000×3 already taken. On death his heires shall get 420000 sum
assured in full without any deductions. Death as well as survival- combination policy both risks are covered.
420000 will be paid as death benifit in afdition to 252000 already paid as survival refund.
383. Policy joint life, Annuety 5000 per month.Ram and his wife soma are insured. Ram died on 25.9.2014
What annuety his wife will be getting after death of Ram?
Ans. NIL. In joint life annuity is payable if both are alive and cease to exist on death of any of two. So nothing
payable to Ram s wife. In joint life annuety stops on the death of Ram. Nothing is paid thereafter.
384. A senior citizen took mediclaim policy on 25.9.2015 for one year for self and spouse and paid a premium of
Rs 32000. What rebate he will get in income tax?
Ans. Senior citizen is entitled to get a maximum rebate of rs 30000 on mediclaim policy premium for self spouse
and childrenfrom the year 2015 -16
385. Mohan 's date of birth is 25.9.1960. He took mediclaim floater policy for self wife son and daughter and
paid total premium of rs 27660. What income tax rebate he will get?
Ans. Other than senior citizens are entitled for a rebate of maximum rs 25000 for mediclaim premium for self
spouse and children from the year 2015-16. If they pay less premium then rebate in It will be limited to that only
this is the maximum rebate one can get.
386. Out of 400 houses, each valued at Rs 20000, on an average 4 houses get bunt every year resulting in
combined loss of Rs 80000. What should be the annual contribution of each house owner (premium)
a) 200 b) 100 c) 80 d) 400
Ans. A
387. Insurers prefer to underwrite -----groups to avoid possblty f adverse selection

a) Very large b) Very small c) Large d) Small e) None
Ans- Large
388. Photo is required as KYC at which stage
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A fact finding b. Presentation by insured
C. Acceptance of risk D issuance of policy
E. None
Ans. C
389. A house holder policy insured should have insurable interest at the time of policy document received r at
the time claim occurred
Ans- At both times he must have insurable interest
390. Which symbolises disc rate
a) Expected return on d fund b) Future expctd returns
c) Expected Mort rate d) Expected equity return
e) Nota
Ans. A
391. In reinsurance, who pays the losses in case the insurer becomes insolvant
Ans- Reinsurer will pay for the loss for his acceptence limits. Liquvidator will be appointed for settlement of
insurer liabilities.
392. In insurance concept reinsurance is

1 insuring and re insuring 2 insuring 2 times
3insurance by choice 4 sharing of risk
Ans- 4 is the answer ---- sharing the risk
393. Polcy assigned n the name f X,but death f Life Assured, all d benefits under d policy shall b gvn to his legal
heir. True./ false
Ans. False
394. If a life Insurer met loss n annuity, it means

A over estimate of mortality rate B under estimate of Mortality rate
C under estimate of expenses D nota
Ans - A over estimate of mortality rate
395. What is the probability of survival of a 60 yrs old person till the age of 62 yrs when the mortality probability
at 60 is 2% and at 61 is 2.1%
Ans. Assume 100@age 60, 100 – (100*2%) is 98, 98 is mortality problty @ age 61, next 98 * 2.1% = 2.058,
98-2.058 = 95.94
396. A mortality rate of 10 per thousand in a population od 1000 would mean mortality rate of
A. 0.01% B. 10% C. 1.40% D. 1% E. None of the above
Ans. 1% (1000÷10. Means 1 in 100. Thereby 1%)
397. 25000 single premium, 10yrs term, Discount applied 6.4%, what will b prem if discount is 8.2% ?
Ans. (1.064)^10÷(1.082)^10x25000=21138
398. Cal. Total deaths after 2 years total population 10000. Death rate is 5.
Ans. 99.75 (First year it is 50. For next year sirvival is 9950 and its 5 per mili is 49.75. Total is 99.75)
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399. If a health rider is added to a term assurance

a) Pure premium Increase b) Total prem increases due to increase in expense loading
c) Pure prem remains the Same
Ans. Term assurance covers death risk. If health rider is added it will not have any effect on pure premium. Pure
premium in this term insurance is for death risk. Pure premium will not be effected. Nothing in insurance
parlence come free. Every thing has some cost. Term assurance is a type of lolicy which covers mortality risk. It
is not a rider. LIC policies are divided in 3 parts - 1term assurance, 2Endowment & 3Annuety
A. 2% of premium B. 2% of S.I. C. 5% of premium D. 35% of premium E. None
Ans. none
RAPID FIRE QUESTIONS
1. New mortality table yr – (2006-2008)

2. Sol. Ratio 200 % means...( for this qstn 3 similar sentences, with a small twist in word)
3. How many master pol issued – (many)
4. Benefit payment on death only policy is (term assur)
5. Annuity do not give benefit in the form of (lumpsum)
6. Persons own insurable interest in own life (unlimited)
7. Free look period (15 Days)
8. Agent offering commsn (criminal, if option of criminal not given then corrupt)
9. Investment in corporate bond yield ( Interest )
10. Traditional product , surrender val 2 to 3 yrs (30%minimumexcluding premium paid in first year)
11. Trdnl prdct, surrender val 5 to 7 yrs (50%of the premium paid except premium paid in first year)
12 who is insured in reinsurance? (Insurer)
13. Measure of death is called ( mortality rate)
14. Increase in int rate, prem rate in term ... (decrease)
15. LIC takes EOL as ... ( catastrophe)
16. Protection of a 19 yr old is likely to be (self protection)
17. Pol taken by employer for bnft of employees. (Group)
18. Claw back results in (lower surrender and lapsation rate/ratio)
19. Single prm 40000, 30 yr term, 25 yr duration, 7%, 9%? (1.07)^25÷(1.09)^25×40000=answer
20. Prm 25000, 12 yr term, duration 10 yrs, disc 10.%, 8% ? (1.10)^10÷(1.08)^10×25000=answer
21. ULIP expansion ? (unit linked insurance plan)
Q. Which policy is useful for married couples / Business partners

A. Term assurance plan B.whole life policy
C. Endowment assurance policy D. Joint life insurance plan
Ans- D
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Q. In RBC regime RBC 100 cr. RSM 70 cr. If the co needs 150% of solvency ratio. What will be rbs/RSM required
Ans. 150% *100= 150. In RBC regime RSM has nothing to do.
Q. A reinsurance arrangement reduces claim volatility for an insurer because it reduces gross claim ratio. T/F
Ans. True
Q. Expected financial strain means - financial loss at the outset due to

a. Higher renewal expenses than future premium
b. Service tax
c. higher initial expenses than first year premium
d. Benefit pay out
e. Stamp duty
Ans- C
Q. Which provision prevents two different group pol.

A. assignment of policies B. transfer of benefits
C. Co -ordination of benefits D. no such benefits.
Ans. B
Q. A reins. arrangement reduces claim volatility for an insurer because it reduces gross claim ratio. True or false?
Ans. True
Q. An inflation assumption will be necessary to apply to loadings in respect of -
1. Initial 2. Renewal 3.Terminal 4. B&C E. All
Ans. B
Q. Commissn effects the interest of

A) shareholders B) stakeholders C) policy holders D) only share & stakeholders E) nota
Ans. C policyholders
Q. Rs.2000/- is to be paid after 2yrs if interest rate is 10% compounded yearly. What will be the present value?
A) 1720 B) 1667 C) 1653 D) 1637
Ans. 2000/(1.10)^2=1653
Q. A life table is prepared by using the following past data -

a) Life expectancy at birth b) Mortality rate at different ages
c) Number of births during different years in the past d) A&B only
e) none if the above
Ans- B is the correct answer of mortality
Q. Prem at a discount of 6% term 25 year prem 20000 what would be prem at 8% discount
Ans. (1.06)^25/(1.08)^25x20000 = 4.2918/6.8484x20000=12533.73
Q. Which of the following statement regarding claw back is correct?

a. Claw back is affected when the claim happen early
b. Claw back is affected when a policy lapses
c. Claw back is affected when a policy is surrendered early
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Ans. C
Q. Survival rate at 50 yrs. 78670 at 51 78000 find morality rate at 50 yrs.

Ans. Rate is 0.8516
Q. What key event is most likely to prevent insurers from ensuring that each person brings a fair premium to the
pool for the risk presented?
A. A policy assignment B. A sudden illness C. A fraudulent claim D. A steep rise in inflation
Ans. C
Q. Excess of loss comes under which of following

Non proportional Proportional Quota share
Ans- It is quota share----- each policy is shared by original insurer and reinsurer.
Q. Code of conduct of surveyors & loss assessors is fixed by a) Ins. Co. b) IRDA c) State Govt.
Ans. By IRDA
Q. In RBC regime RBC is 400 cr. RSM is 350 cr. ASM 300 CR. How much more is required by the company.
Ans. 100 Cr (RBC-ASM)
Q. In traditional insurance products, investment risk are with.

Policy holder Government Regulator Insurance company
Ans- In traditional risk is always with insurer only. Whereas in non traditional it is always with policy holder.
Q. Mr ram wants to avail joint life insurance after his death his spouse need pension. His aim to make payment
to estate& estate planning. What type f policy he need.
Traditional endow Joint life ins Modified whole life ..
Ans- modified whole life is the answer.
Q. In a LIC product, profit will be more than estimated profit when,
a) assumptions are better than experience
b) Experiences are better than assumptions
c) expenses are less than competitors
d) claims are lower than competitors and
e) assumptions dont matter.
Ans- A
Q. Which s true
A. since commn loading starts after 10 yrs, investors want to invest n short term policies
B. in term policy, event s uncertain but beneft s time& certain
C. in mney bk the beneft s uncertain but claim s known
Ans- B is true rest all are false
Q. A person's insurable interest in his own life is.

10 times his salary Obligations for family Unlimited Equal to his assets Non of the above
Ans unlimited
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Q. Which one of the following is not a group of insurance product.
Trade union Group of individuals Group of employees Club None
Ans- None
Q. Which product may have variable expenses structure?

Unit link ins . product Term assurance
Health rider with term assurance Participating endowment
Participating money back
Ans. ULIP
Q. A mortality rate of 10 per thousand in a population of 1000 would mean mortality rate of:
a) 0.01% b) 10% c) 1.40% d) 1%
Ans.- 10/1000* 100
Q. Pure endowment policy SI 500000 Term 20 Premium 100000. If discount rate 6% what would be premium.
Ans. 1.06×1.06^15=3.2071
100000/3.2071
Q. Which is the highest

A. Single premium B. Quarterly premium C. Half yearly D. Annually
Ans- A Single Premium
Q. RBC Regime. RBC 1000 cr. RSM 100 cr. Solvency ratio 1.5. How much more is required by Co
A 400 cr B 1500 cr C 900 cr D 200 crore E none
Ans. C
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IMPORTANT POINT –
Non conventional group are less homogeneous.

Where there is direct relationship is called homogeneous group.
Where there is no direct relationship but some relationship is called non conventional group Which are also
known as less homogeneous.
Medical expenses borne by insurer only.
In Ulip investment risk is always with Policy holder.
In traditional plan risk is always with Insurer I.e insurance company
Whose risk is covered in policy is called Insured.
Stamp duty is fixed by government
Insurance councils appoints OMBUDSMAN FOR HEARING OF INSURED GREIVANCE.
Rate of interest increase premium decreases - Opposite always
In annuity plan Medical is not required at all.
In group ins medical may be required at beyond certain age.
Life insurance policies are Benefits policy
Withdrawal is not a expense
Solvency ratio - Asm/ RSM
Arbitrage is Financial reinsurance
Solvency ratio should be 150% all the time as per ida.
3000 is annual premium. Net premium is 2520. 480 which is the difference between her premium and net
premium is Interest earned on the policy
Commission is less in group policy as compared to invidual.
CRB Is always declared as a --% of last year declared bonus
Foreclosure begins when Loan and interest accumalte
To achieve something you need Willingness
A life insurance policy can be made paid up. What particular features exist is Saving element.
Claw back will result into Lower commission
Banks act now as broker
RBC calculations will always need more capital than RSM. True
Basis of insurance is proposal form
Cedent/Insurer receives ceding commission from Reinsurer
Retrocession means Insurance of reinsurance
Pure endowment cover - Survival risk
Pure term policy covers - Death risk
Commission depends on Premium not sum insured.
Most important factor in calculating mortality is Age
The sum of mortality and survivor is always One
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Which policy gives money at regular intervals - Money back.
An agent can work now One gen insurance, one life, One health insurance, One agricultural, One ecgc Total five
No benefit is paid on non profit policy. It is always paid on With profit policy
Forclosure accumulates and equals to sum of loan and interest.
Lapsation ratio should be Minimum
Look back period is 15 days from receipt of policy bond
Minimum term of lic policy Five years
Claw back results into lower cancellation and. Lapsation of policies
Insurance can be best describes as Sharing of risk
Profit margin should alway be Minimum in a new business.
Conventional group are Homogeneous
Ulip mortality with insurer or insurance co. It is never with insured.investment risk in Ulip always with insured.
Policyholder or insured is one and same only
Regulator has fixed MAXIMUM commission which can be paid by any insurer in india. Means thereby that no
insurance co. Can pay more then this %of premium. Single pre. 2%of premium. Less then 10 year of
registration 40% in first yr more then 10 yr of registration 35%of premium. in first yr. 2nd and3rd year
7.5%maximum and more then3 yr 5%maximum can be paid as commission by insurer in india. Nobody can pay
more then this %of premium as specified above as per regulator As commission
Commission is paid as remuneration by insurer to agent or distributor.
In reinsurance commission is paid by reinsurer to insurer for the business he gives to reinsurer.here he means
original insurer works as agent/distributor.
Q. RSM regime Sol. Ratio-1.5%, RBC-500cr, RSM-400cr. How much more req.
Ans. Since, it is RSM regime, 400x1.5%=200 cr. more is required
If it were RBC regime, The answer will be RBC 500cr required, RSM 400 cr. 500-400 cr=100 cr more required.
Q. From insurers point of view , investment income is

A. Last 10 yr current yield B. Yield from Govt. Policy bonds
C. Annuity bond D. None
Ans. Usually insuer investment income will b arrived from govt bond to get secured income
Q. Which of the following is not a factor that influence design of insurance products
A. Profitability B sales C customers expectations
D. Regulations E. Nota
Ans- Product design can be always in accordence with the regulations. Means thereby E Should be correct
answer i.e.NOTA.
Q. RBC 1000 cr. RSM 100 cr. Solvency ratio 1.5. How much more i s required by Co
A 400 cr B 1500 cr C 900 cr D 200 crore E none
Ans. 100×1.5=150cr. 150cr-100cr=50crore more is the requirement
If it is RBC regime and RSM and asm is given in question then subtract Asm From RBC what so ever comes that
will be the requirement. If 1.5 is also given that will be for puzzeling you. 1.5 do not have any role in. RBC
regime. If it is RSM regime RBCIs given in that question for puzzeling you. In RSM regime question RBC do not
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have any role to play. Requirement will be 1.5. You will have to multiply the RSM by 1.5 and subtract RSM from
that what so ever comes is the requirement.
Q. If in a single premium term ins policy sum of the expected benefit payout expense is 250000/- released at end
of term & duration of the liabilities is 18 years. What will be the single premium assuming discount rate as 9%.
1) approx.53000 2) approx.48000 3) approx.65750 4) approx70000 5) approx.59000
Ans- A. Discout rate is the rate of discount which the insurer gives to the policy holders for interest earnings on
premium which he pays.
250000÷(1.09)^18=answer
Q. Term insurance policy, Sum insured 25 lacs, Premium 500000, Term 25 yrs, Duration 20 yrs. Disc.rate taken
into a/c 7.25%. Find premium if discount rate becomes 8.50% ?
Ans- (1.0725)^20÷(1.0850)^20×500000=answer
Q. Policy. Endowment. Sum ins. 1000000. Premium. 300000. Term 15 yrs. Duration 13 yrs. Calculate
premium/find premium/what will be premium if we give discount of 6.25%?
Ans- 300000÷(1.0625)^13=answer
Q. no of person at age 30 will be given in question say 67789 and death rate as 0.030 and death rate at 31 as
0.031 . tell the person survived at the age 31 or begining of the age 32
Ans- Method to solve these question is as under × = - =× = - =answer
67789×0.030= - = ×0.031= - =answer
1 Multiply the persons with death rate at the age 30

2 then press =on calculator .then press - on calulator .then multiply it with death rate at 31 then press = on
calculator then press -- on calulator then press = on calculator .whatsoever comes will be the answer
Q. Lives at age 30. 67789. Lives at age 31 67070. Find/caculate death rate at the age 30?
Ans- Subtract lives at 31 from 30 and whatsoever comes divide that by lives at 30 and get the answer.
Q. Benifit value is 700000 exp 10% profit 10 wt is premium?

Ans- 700000×10%=70000+=770000×10%=answer
Q. prm at a dis of 6%/term 25 yrs/ prm 20000 wt would be prm at 8% dis?

Ans- (1.06)^25÷(1.08)^25×20000=answer
Q. Skill required by an agent for selling best suited product to customer?

Analytical Communication skill Interpersonal skills
Ans- Answer is communication skill.
Q. Which of the following symbolises discount rate

A. Future expected expenses B. Expected Mortality Rate
C. Expected equity returns D. Expected returns on the fund
Ans- D
Q. The reason for requirement of solvency ratio greater than one can be described as
A. Enough capital to pay obligations in the case of some catastrophe
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B. Additional protection to policyholders
C. To enable ins. Co. To earn more return on assets
D. All of the above
E. A n b only
Ans- E means a and b
Q. Adverse selection refers to

A. Wrong policies being selected
B. Selection of wrong target segment by ins. Co
C. Substandard lives entering ins. Contracts by non disclosure
D. Lack of consensus ad idem
E nota
Ans- C
Q. As per Indian regulations, Which of the following is a correct statement.

A . Indian rules generally provides a floor on the commission payable to insurance agents
B . On the sale of an insurance policy, distributer and shareholders. can be entitled for insurance commission.
C. A & B only
D. Non of the above
Ans- D is the answer. There is no floor commission concept and Shareholders are never entitled for any
commission.
Q. What is the criterion of the good saving plans?

A. Yield B. Safety C. Liquidity D. All of the above
Ans- Good saving plan as per asset managment must consist of Liquidity, Safety And yield
Q. sum insured rs. 100000 mode yearly endowment policy 30 years without profit start from 25-10-1993 first
unpaid premium 25-10-2001 the paid up value will be?
A 24000 B 26667 C 28763 D 29876 E 25678
Ans- 100000×8÷30=answer
Q. RSM regim, solvency ratio 1.5%,RBC 500 cr,RSM 400 cr.how much more is required by co.?
100 600 1000 200
Ans. 600-400=200
Q. A money back plan is generally?
Endowment Whole life Pension Term All the above
Ans- Endowment only. Money back is such policy in which money is returned to insured if he survives a regular
intervals. Money back at the rate of 20:20:20and 40 at maturity.
Pure term assurance is a policy which covers death risk only. If insured dies with in tenure sum insured is paid.
If survives nothing is paid. The premium paid is kept by insurer. This is highest sum insured in lowest cost. It is
benificial for those who comes to india for some short period project completion. Pay less/nominal and get
higher benifits.
Opposite to this is pure endowment policy. Which covers survival risk only. If insured dies during term of the
policy nothing is paid.but if he survives the term of policy full sum assured is paid.
Double cover endowment assurance is a type of policy in which 2x is paid on death during the term of policy and
x is paid on survival.
Opposite to this in double Endowment assurance x is paid in case insured dies in policy period and 2x is paid if
Page 51
policyholder survives the term of policy.
Joint life assurance is such a policy which gives annuity till such period both are alive. And annuety stops on
death of one out of two.
Annuety for n years and whole life thereafter.is such a policy in which annuety is paid for fixed years and whole
life thereafter.
Either of the surviver is such an annuety which starts on death of one person and anuety continues till the death
of second person. It stops on death of second person.
LIC can be divided in to three:-1. Term assurance, 2. Endowment, 3. annuety
Annuety are mainly of two types – 1. Immediate & 2. deferred
Immedite annuety begins on the day immediately on payment of lumpsump single premium.
Whereas deffered annuety begins on the date which is always pre fixed and start on deffered date.
Anuety can be paid in Monthly / Quarterly / Half yearly / Annual Instalment as per choice. But it can never be
paid as lumpsump.
Q. Quota share treaty. Share 40:60. Insurer share 40. A loss occured for 7000. Find out the share of loss of
reinsurer.
Ans. 4200
Q. Xs of loss treaty. All losses beyond 800 crores in motor OD portfolio to be Borne by reinsurer. Insurer book
losses of 600 cr. in a particular year. How much reinsurer will bear?
Ans. NIL since the loss is within insurer’s retention limit.
Q. Xs of loss treaty. All losses beyond 800 crores in motor OD portfolio to be Borne by reinsurer. Insurer book
losses of 1200 cr. in a particular year. How much reinsurer will bear?
Ans. 400 Cr.
Q. Who lost control over the policy - Nominee or assignee

Ans- None. Nominee and assignee are the persons who gain control in policy due to assignment or nomination
by policyholder. It means nominee n assignee are same. Nominee gets claim in case policy holder dies. He
donot have any legal claim in case the policy holder is alive on date of maturity of policy. Where as in case of
assignment the assignee gets legal rights .policyholder is alive or not makes no difference.
Inlife insurance parlence policies are assigned to banks or financial institutions as collateral security. In case of
death of loanee they are entitled to recover the loan outstanding amount from the maturity amount as per
assignment made in there favour and endorsed on the policy by the insurer on the request of policyholder when
he was alive. It will be cacelled on a written letter request by the bank or financial institution. In case of loan is
fully paid ,bank or financial institution shall give a no objection certificate in view if total loan recovery on receipt
of which assignment will be cancelled by insurer.
Q. Last year's claim outgo700000/-, Health inflation 10%, Profit margin 10%. Calculate the single premium?
Ans. 700000×10%=70000, 770000×10%=77000. Ans. 700000+70000+77000 = 847000
Q. Mediclaim in a stands at 3 lac. Medical inflation rate is 8%. Profit margin 6%. Find out single Prem.
Ans. 343440 (Prem= claims+exp+profit margin - 3lac + 8%=324000, 324000 x 6%=19440,324000+19440=343440)
Q. In a facultative re insurace 30% is kept by original insurer to his own account, 20% is ceeded to reinsurer 1
And 50% to reinsurer 2. A loss of 9 cr. occured. how it will have to be shared between reinsurer1 and
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Reinsurer 2?
Ans. 30% of 9cr. ie 2.7 cr will be borne by original insurer, 20% of 9 cr ie 1.8cr will be recovered from 1st
reinsurer and 50% of 9 cr ie 4.5 cr. will be recovered from 2nd reinsurer.
Ther is no upper cap on surrender value But minimum cap is there. 1 year to 3 year minimum surrender value is
30% of the premium paid excluding first year premium. More than 3 but less then 7 years it is 50 % of the
premium paid excluding premium paid for the first year. More than 7 years it is upto 90%of the premium paid
excluding premium paid for the first year as per scale. Remember it is minimum any insurer can pay more then
this as per his own discretion
Remember annuety is always paid in instalments whether that may be monthly/Quarterly/Half yearly/Annually
But it is never paid in lumpsump. In Endowment no instalments. Choice of instalments selection is with
annutent.
Minimum members to form a group is 50.

Maximum unlimited.
As per act in superannuation even a single person is treated as group.
No commission is payable in online fresh policies. But if any renewal is made on online then commission goes to
that agent whose renewal is that policy.
If fresh policy 10%discount is given to policy holder in lieu of agency commission.
On online renewals commission is paid by insurer /insurance co. To the agent whose policy is renewed online.
Banks were corporate agents till financial year 2014-15. But now they are brokers as per finance minister speech
on budget in parliament for the year 2015-2016.
for online fresh business no body pays commission to anyone instead policy holder gets 10%discount on
premium.
For renewal online it is the agent in whose agency premium was booked originally who gets commission and
insurer or insurance co. Pays it.
Double cover, d = SA Survival = 2 x SA

Double endow, d = 2 x SA and Survival= SA
In double cover Endowment both death and survival benifits are covered .only quantum differ.it means it is
combination policy of term and Endowment. in this 2x is paid on death and single x is paid on survival the term
of policy.
Whereas in double Endowment which is also combination of both term and Endowment single x benifit is paid in
case of death during term and 2 x on survival the term of policy.
Q. In a life table, no. Of survivors at age 28 are 87856 & no. Of survivors at age 29 are 86999. Determine
mortality rate at age 28.
a. 1% b. 1.1% c. 1.05% d. 0.98% e. 0.95%
Ans. D (87856--86999=857÷87856=0.00975=0.98)
Q. In a life table, no.of survivors at age 45 is 89450. Assuming mortality probability at age 45 is 0.1% & mortality
probability at age 46 as 0.11%, determine no. Of survivors at age 47.
a. 89262 b. 89260 c. 88875 d. 89250 e. 89150
Ans. A (89450×0.1%=89.45 - = 89360.55 × 0.11% = 98.2966 - = 89262 answer - 89450*0.1%=89.45, 89450-
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89.45=89360.55, 89360.55×0.11%=98.29, 89360-98.29=89262)
Q. Capital requirement as per RBC is 1000Cr & RSM is 600Cr. How much free assets if solvency ratio requirement
is 1.5.
a. 1000Cr b. 1500Cr c. 600Cr d. 900Cr. e. none
Ans. D. Solvency ratio is always connected with RSM only. It is Regulator who requires this ratio as 1.5. It has
no relation with RBC. Therefore 1.5 × RSM = 600×1.5=900 Cr.
There will be three questions in all on this pattern in your test. First thing to check which regime? Answer will
be according to regime. If rbc regime, Subtract the asm and answer will be before your eyes. If rsm regime and
requirements 1.5 then multiply rsm×1.5=answer before your eyes
Q. In single premium term insurance, sum of expected benefit payouts & expenses is 1.5lacs released at end of
term& duration of liabilities is 20yrs. What is the Single premium assuming discount rate as 7%.
a. 43750 b. 38500 c. 60000 d. 54000 e. 42590
Ans. 150000÷(1.07) 20 = 150000 ÷ 3.8696= 38764=38500 Rounded OFf
Q. Assume single premium of 30000 for 20 yrs term insurance policy which has a duration of 15 yrs& discount
rate 10%. If discount rate assumption would hav been 9%, what would be the approximate premium.
a. 36000 b. 40000 c. 34500 d. 27000 e. 25000
Ans. C (30000×(1.10) 15× (1.09)15 =30000×4.1772÷3.6424=34405=34500 rounded off)
Term is the period in which risk is borne by insurance co. and Duration is the period in which instalments will be
paid. Since discount to be given is the question, Therefore duration is the period for which instalments will be
received and invested, Whatsoever earned as interest will be passed on to the policyholder in the shape of
discount. Therefore only duration is to taken into account for calculations not the term.
Q. What document can not be used a residence proof

1. Adhar cards 2. Voter card 3.PAN card
Ans. 3 Pan card. Address will not be there in PAN card
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8. The drive to do something to achieve an end is called

12. Who pays commission to agents

14. Cost of agents training is considered as

16. Which is correct

17. Which of the following is false.

19. What is true

20. Which is false

21. Premium base scenario must meet profit requirement

23. How is annuity paid

24. Generally non conventional group are

25. Which is true

26. Which of the following statements are true

29. As per Indian Regulation Act, calculation of RSM depends on

31. Bank as distributors are

32. Commission less in group policy as co.pared to individual policy. True/false

35. Product pricing is independent of

36. Loan can be available on policy

37. Expenses in pricing could be

38. Prescribed formulae for calculation of a RSM considers

39. To whom the payout will be higher in term insurance

40. As an insurance intermediary banks act as

42. In profit product investment risk is with

43. RSM calculation is based on shareholders under which include

44. Life insurance is also known as

47. Ceding commission is paid by whom

49. Health insurance is part of which line of insurance?

52. Recurrent single prom approach is in

53. Interest rate changes effects

57. Adverse selection is due to

58. Single perm term policy commission loading can be described as

63. When a person do estate & health planing?

64. No claw back will result into ..... commission

66. Premium will be higher for

67. Rent expense is

69. agents are renumerated by

70. Which policy has less medical underwriting

73. Concept of insurance involves a transfer of

80. Difference between survival benefit and maturity benefit?

85. A group insurance contract is a contract

86. Which group is homogeneous

88. In group contract minimum size of individual members is

96. In unit linked products, mortality risk is always with

97. Risk of suffering disability is which type of risk:

101. What is the maximum size of the group in Life Insurance

105. Main role of an underwriter in a non life insurance co. is

106. Insurance company makes profit

108. Who designs the policy

109. In Traditional Life Insurance product, investment risk is with

111. Factors not to determine rating of premium

115. Ceding Commission is described as

118. For cancer which rider is useful

119. Commission is paid to the insurance agent by

121. Direct expenses are divided into

132. Which is true

133. While calculating solvency margin following is required

134. Which product will have variable exp. Structure

135. Non conventional group are less homogeneous. True / false

139. Ambiguity in language in policy used is against

143. An inflation assumption will be necessary to apply to loading in respect of

145. The saving benefit is linked with which of the following

146. Difference between real needs and perceived needs

147. Expenses in pricing could be

148. Which product may have variable exp. structure