Insurance MCQ Questions and Solutions with Explanations | Commerce

Universal life policies are kept in force even if premiums are not paid, provided its cash value was sufficient to pay for Mortality charges and expenses.

Universal Life plans provide for Payment of additional premiums over and above the target amount and Skipping of premiums.

Universal life insurance policy provides for partial withdrawals. This partial withdrawal was made from the policy’s Cash value. Cash value may also be used to pay policy premiums. If there is sufficient cash value, a policyholder can stop paying premiums out-of-pocket and have the cash value account cover the payment.

Both the statements are correct.
The partial withdrawal once taken need not be repaid and Policy was kept in force even if premiums are not paid provided there were adequate investment returns.

As per IRDA, Variable insurance plans and Unit Linked insurance plans non-traditional products are permitted to be sold. Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, which is invested in a number of sub-accounts available in the policy. Unit linked insurance plan(ULIP) is a market-linked product that aggregates the very best of investment and insurance. It is a plan which is linked to the capital market and offers flexibility to invest in equity or debt funds as per risk appetite.

Variable Life Insurance is a kind of Whole life Insurance. Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, which is invested in a number of sub-accounts available in the policy. A sub-account acts similar to a mutual fund, except it's only available within a variable life insurance policy.

In Variable life insurance, the death benefit and cash value of the policy fluctuate according to the investment performance of a special investment account into which premiums are credited.

Under Variable life insurance, if the cash value became zero, the policy would Terminate. Variable life insurance is a permanent life insurance product with separate accounts comprised of various instruments and investment funds, such as stocks, bonds, equity funds, money market funds, and bond funds.

In traditional cash value policies, the policy reserve form part of a General investment account. When an insurance company underwrites a new policy, it is paid a premium by the policyholder. These premiums are deposited into the insurer's general account.

In Variable insurance policies, the policy reserve form part of a Special investment account.