Page 1 of 119
ALU 202 EXAM | FREQUENTLY TESTED
QUESTIONS WITH CORRECT ANSWERS |
BRAND NEW!
All of the following statements regarding a protective value study
of underwriting requirements are correct EXCEPT:
A. It should evaluate which requirement identified the underlying
impairment.
B. It should consider the proposed insured's behavior in
accepting or rejecting the offered policy.
C. It should measure the difference between select and ultimate
mortality.
D. It should ensure that the offered product is "at the market". -
✔✔✔ Correct Answer > It should measure the difference between
select and ultimate mortality.
Underwriting criteria generally used in the pricing of preferred
policies include - ✔✔✔ Correct Answer > Blood pressure, cholesterol
and family history
,Page 2 of 119
All of the following are pricing components of life insurance
established by regulation EXCEPT:
A. reserve basis
B. tax law
C. nonforfeiture laws
D. asset risk - ✔✔✔ Correct Answer > Asset risk
The relationship of mortality savings from a requirement to the
cost of administering the particular requirement is - ✔✔✔ Correct
Answer > Protective value
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 - ✔✔✔
Correct Answer > Risk-based capital (RBC)
Pricing components include - ✔✔✔ Correct Answer > Mortality and
Lapse Rates
The insurance industry of today is dominated by - ✔✔✔ Correct
Answer > Term products
The single largest expense related to a life insurance product is -
✔✔✔ Correct Answer > Mortality
,Page 3 of 119
In Canada, statutory reserve standards are established by - ✔✔✔
Correct Answer > Federal regulation
Pricing components of a life insurance product include what? -
✔✔✔ Correct Answer > Mortality costs, lapse rates and interest rates.
Describe a protective value study - ✔✔✔ Correct Answer > The
relationship of mortality savings from a requirements to the cost
of administering the particular requirement.
One of the two distinct issues involved in the Reasonableness of
Pricing Expectations is:
A. The value of underwriting requirements
B. Policy face amount
C. Preferred risk underwriting
D. Interest Rate Risk - ✔✔✔ Correct Answer > The value of
underwriting requirements
What has a significant impact on the ultimate cost of product? -
✔✔✔ Correct Answer > Target market
, Page 4 of 119
What takes place with more stringent underwriting? - ✔✔✔ Correct
Answer > Expected mortality decreases and Lower, more
competitive prices
The average time it takes for a carrier to recover from the
expenses incurred upon issue is: - ✔✔✔ Correct Answer > 5 Years
When deciding if the cost of obtaining additional requirements
can be justified from an expense perspective, what would be
considered? - ✔✔✔ Correct Answer > The time taken to issue a policy,
the cost of the requirement and the protective value
Federal taxes paid by an insurance company are income based
and include what? - ✔✔✔ Correct Answer > Tax reserves and deferred
acquisition cost (DAC) tax
The actual profitability of a life insurance product cannot be
determined until... - ✔✔✔ Correct Answer > Until the last policy has
lapsed or the last policyholder has died and there are no insured
lives left in the company's books.
Two Key Items Considered for Products - ✔✔✔ Correct Answer > 1. An
organization needs to have the skill set to appropriately analyze
the risk being considered.
ALU 202 EXAM | FREQUENTLY TESTED
QUESTIONS WITH CORRECT ANSWERS |
BRAND NEW!
All of the following statements regarding a protective value study
of underwriting requirements are correct EXCEPT:
A. It should evaluate which requirement identified the underlying
impairment.
B. It should consider the proposed insured's behavior in
accepting or rejecting the offered policy.
C. It should measure the difference between select and ultimate
mortality.
D. It should ensure that the offered product is "at the market". -
✔✔✔ Correct Answer > It should measure the difference between
select and ultimate mortality.
Underwriting criteria generally used in the pricing of preferred
policies include - ✔✔✔ Correct Answer > Blood pressure, cholesterol
and family history
,Page 2 of 119
All of the following are pricing components of life insurance
established by regulation EXCEPT:
A. reserve basis
B. tax law
C. nonforfeiture laws
D. asset risk - ✔✔✔ Correct Answer > Asset risk
The relationship of mortality savings from a requirement to the
cost of administering the particular requirement is - ✔✔✔ Correct
Answer > Protective value
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 - ✔✔✔
Correct Answer > Risk-based capital (RBC)
Pricing components include - ✔✔✔ Correct Answer > Mortality and
Lapse Rates
The insurance industry of today is dominated by - ✔✔✔ Correct
Answer > Term products
The single largest expense related to a life insurance product is -
✔✔✔ Correct Answer > Mortality
,Page 3 of 119
In Canada, statutory reserve standards are established by - ✔✔✔
Correct Answer > Federal regulation
Pricing components of a life insurance product include what? -
✔✔✔ Correct Answer > Mortality costs, lapse rates and interest rates.
Describe a protective value study - ✔✔✔ Correct Answer > The
relationship of mortality savings from a requirements to the cost
of administering the particular requirement.
One of the two distinct issues involved in the Reasonableness of
Pricing Expectations is:
A. The value of underwriting requirements
B. Policy face amount
C. Preferred risk underwriting
D. Interest Rate Risk - ✔✔✔ Correct Answer > The value of
underwriting requirements
What has a significant impact on the ultimate cost of product? -
✔✔✔ Correct Answer > Target market
, Page 4 of 119
What takes place with more stringent underwriting? - ✔✔✔ Correct
Answer > Expected mortality decreases and Lower, more
competitive prices
The average time it takes for a carrier to recover from the
expenses incurred upon issue is: - ✔✔✔ Correct Answer > 5 Years
When deciding if the cost of obtaining additional requirements
can be justified from an expense perspective, what would be
considered? - ✔✔✔ Correct Answer > The time taken to issue a policy,
the cost of the requirement and the protective value
Federal taxes paid by an insurance company are income based
and include what? - ✔✔✔ Correct Answer > Tax reserves and deferred
acquisition cost (DAC) tax
The actual profitability of a life insurance product cannot be
determined until... - ✔✔✔ Correct Answer > Until the last policy has
lapsed or the last policyholder has died and there are no insured
lives left in the company's books.
Two Key Items Considered for Products - ✔✔✔ Correct Answer > 1. An
organization needs to have the skill set to appropriately analyze
the risk being considered.
