ALU 202 TEST BANK COMPLETE
QUESTIONS AND ACCURATE ANSWERS
EXPERT VERIFIED FULL STUDY GUIDE
⩥ All the following are life insurance pricing components that are
established by regulation EXCEPT:
1. reserve basis
2. tax law
3. non-forfeiture laws
4. asset risk.
Answer: Answer 4: asset risk - pages 6-7.
⩥ The relationship of mortality savings from a requirement to the cost of
administering the requirement is:
1. surplus value
2. protective value
3. business value
4. reserve value.
Answer: Answer 2: protective value - page 8.
,⩥ What are the components considered by the actuary in the pricing of
new products?.
Answer: Refer to page 3.
⩥ Describe the types of risk that must be covered by the allocated
surplus..
Answer: Refer to page 2.
⩥ All the following statements regarding a protective value study of
underwriting requirements are correct EXCEPT:
1. It should evaluate which requirement identified the underlying
impairment.
2. It should consider the proposed insured's behavior in accepting or
rejecting the offered policy.
3. It should measure the difference between select and ultimate
mortality.
4. It should ensure that the offered product is "at the market.".
Answer: Answer 3: It should measure the difference between select and
ultimate mortality—pages 8-9.
⩥ A safety net that needs to be provided beyond the level of reserves
being held in case a company's mortality experience turns out to be
much worse than expected is referred to as:
,1. risk-based capital
2. reserve basis
3. statutory reserve
4. deferred acquisition cost.
Answer: Answer 1: risk-based capital—page 7.
⩥ What items are included in the expense levels that are built into
product pricing?.
Answer: Refer to page 5.
⩥ Name four factors that could affect the profitability of a product and
explain in what way profitability could be affected..
Answer: Refer to pages 3-6.
⩥ Describe how exceptions can affect the profitability and mortality of a
product..
Answer: Refer to page 11.
⩥ For direct carriers, the average percent of premium assigned to cover
mortality is:
1. 30%
, 2. 50%
3. 75%
4. 90%.
Answer: Answer 2: 50% - page 20.
⩥ Companies will update existing cost benefit studies for which of the
following reasons?
A. changes in pricing
B. competitive landscape
C. actual experience
Answer Options:
1. A only is correct.
2. C only is correct.
3. A and B only are correct.
4. A, B, and C are correct..
Answer: Answer 4: A, B and C are correct - page 19.
⩥ A hit rate of 3% associated with a table 8 (200 debit) average rating
results in which of the following:
QUESTIONS AND ACCURATE ANSWERS
EXPERT VERIFIED FULL STUDY GUIDE
⩥ All the following are life insurance pricing components that are
established by regulation EXCEPT:
1. reserve basis
2. tax law
3. non-forfeiture laws
4. asset risk.
Answer: Answer 4: asset risk - pages 6-7.
⩥ The relationship of mortality savings from a requirement to the cost of
administering the requirement is:
1. surplus value
2. protective value
3. business value
4. reserve value.
Answer: Answer 2: protective value - page 8.
,⩥ What are the components considered by the actuary in the pricing of
new products?.
Answer: Refer to page 3.
⩥ Describe the types of risk that must be covered by the allocated
surplus..
Answer: Refer to page 2.
⩥ All the following statements regarding a protective value study of
underwriting requirements are correct EXCEPT:
1. It should evaluate which requirement identified the underlying
impairment.
2. It should consider the proposed insured's behavior in accepting or
rejecting the offered policy.
3. It should measure the difference between select and ultimate
mortality.
4. It should ensure that the offered product is "at the market.".
Answer: Answer 3: It should measure the difference between select and
ultimate mortality—pages 8-9.
⩥ A safety net that needs to be provided beyond the level of reserves
being held in case a company's mortality experience turns out to be
much worse than expected is referred to as:
,1. risk-based capital
2. reserve basis
3. statutory reserve
4. deferred acquisition cost.
Answer: Answer 1: risk-based capital—page 7.
⩥ What items are included in the expense levels that are built into
product pricing?.
Answer: Refer to page 5.
⩥ Name four factors that could affect the profitability of a product and
explain in what way profitability could be affected..
Answer: Refer to pages 3-6.
⩥ Describe how exceptions can affect the profitability and mortality of a
product..
Answer: Refer to page 11.
⩥ For direct carriers, the average percent of premium assigned to cover
mortality is:
1. 30%
, 2. 50%
3. 75%
4. 90%.
Answer: Answer 2: 50% - page 20.
⩥ Companies will update existing cost benefit studies for which of the
following reasons?
A. changes in pricing
B. competitive landscape
C. actual experience
Answer Options:
1. A only is correct.
2. C only is correct.
3. A and B only are correct.
4. A, B, and C are correct..
Answer: Answer 4: A, B and C are correct - page 19.
⩥ A hit rate of 3% associated with a table 8 (200 debit) average rating
results in which of the following:
