Insurance MCQ Questions and Solutions with Explanations | Commerce

In Unit Linked plan, the Fund Value is a product of Net Asset Value & No. of Units. A value fund is a fund that follows a value investing strategy and seeks to invest in stocks that are deemed to be undervalued in price based on fundamental characteristics.

Pensions are said to represent the flip side of life insurance because Life insurance provides protection against premature death whereas pension covers the contingency of living too long and In life insurance premium payments result in creation of sum assured. In case of pensions, the corpus gets liquidated by regular income payments.

Public Pensions are provided by the State. Public pensions are especially important for the 28 percent of state and local government workers not covered by Social Security.

Public Pensions are funded in Pay as you go. A pay-as-you-go pension plan is a specific type of pension scheme where the benefits are directly tied to the contributions or taxes paid by individual participants. This is in contrast to fully funded pension plans where the pension trust fund is not actively paid into by its future beneficiaries.

Pension may alleviate poverty but are not sufficient to maintain even a modest life style.

An occupational pension is one that is provided by an employer. They are also known as company or employers' pension plans. Occupational pension schemes provide a regular income after retirement.

Defined Benefit type and Defined contribution type is a type of Occupational pension.
A defined benefit pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum (or combination thereof) on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns.
Defined contribution (DC) schemes are occupational pension schemes where your own contributions and your employer's contributions are both invested and the proceeds used to buy a pension and/or other benefits at retirement.

Under Defined Benefit type, the benefit payable is independent of Contributions and Investment earnings.

Quantum of pension under Defined Benefit type would depend on Accrual rate, Salary and Pensionable service.

Occupational pension scheme is a scheme set up by an employer to provide retirement benefits for its employees. Uninsured pension scheme and Insured Pension scheme are Type of Occupational pension scheme.