Insurance MCQ Questions and Solutions with Explanations | Commerce

For participating policies, bonus is linked to performance of the fund. Bonus once announced becomes a guarantee. Such a bonus is called Simple Reversionary Bonus.

The method in which Profits of the ins.co. could be shared in the form of dividends are Portfolio method and Current money method. An income portfolio focuses on making money through dividends or other types of distributions to stakeholders. An income portfolio should generate positive cash flow. A cash dividend is funds or money paid to stockholders generally as part of the corporation's current earnings or accumulated profits.

Inter temporal allocation of resources means allocation of resources across Time. Intertemporal choice is an economic term describing how an individual's current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption levels could increase significantly in the future, and vice versa.

In respect of Traditional cash value plans, Cash value component is not well defined. Cash value life insurance is a form of permanent life insurance that features a cash value savings component.

Non-traditional products are also known as Unbundled plans. An unbundled life insurance policy is a type of financial protection plan that provides cash to beneficiaries upon the policyholder's death.

The major appeal for non-traditional products was in terms of Inflation beating returns, Direct linkage with investment gains and Flexibility & Higher surrender value.

The major motive for people going for nontraditional products are Flexibility, Wealth accumulation and Transparency.

Universal life insurance is characterized by Flexible premiums, Flexible face amount and Death benefit.

In Universal life products, larger the size of the premium, Larger the coverage provided and larger the policy cash value.

Under Universal life products, there was facility of completely flexible premiums after One years.