Insurance Risk and Investment Quiz

Which of these is the biggest risk for whole life insurance?

• Longevity risk

• Mortality risk

• Policies being sold to a third party

• Inflation

Which of these is the biggest risk for property-casualty insurance?

• Longevity risk

• Mortality risk

• Natural disasters

• Inflation

What are the most popular investments for life insurance companies?

• Equities

• Treasury bonds

• Commercial paper

• Long-term corporate bonds

What is variable life insurance?

• Whole life insurance where the policyholder chooses how funds will be invested

• Whole life insurance where the policyholder can vary premiums from year to year

• Term life insurance that can be renewed

• Life insurance where the policyholder can ask for an early payout in certain circumstances

What is universal life insurance?

• Whole life insurance where the policyholder chooses how funds will be invested

• Whole life insurance where the policyholder can vary premiums from year to year

• Term life insurance that can be renewed

• Life insurance where the policyholder can ask for an early payout in certain circumstances

Which fothe following statements are True:

Statement I: "Defined contribution pension plans are more risky for a company than defined benefit plans."

Statement II: "Defined benefit plan the investment risk is borne by the employee"

• Statement I

• Statement II

• Both Statements

• No Statement is True

How is the loss ratio of a property-casualty insurance company defined?

• Ratio of payouts to premiums

• Ratio of payouts plus selling expenses to premiums

• Ratio of all costs to premiums

• Ratio of all costs to premiums plus interest income

An insurance company offers a policy that pays out if a worker becomes unemployed. Which of the following risks are applicable?

• Moral hazard, but not adverse selection

• Adverse selection, but not moral hazard

• Moral hazard and adverse selection

• Neither moral hazard nor adverse selection

What is the minimum USD annual premium that an insurance company should charge for a two-year term life insurance policy with face value ofUSD 1 milion when the policyholder is a woman aged 71? (Use provided Table and assume interest rate of 3%)

• 18,153

• 17,691

• 17,996

• 17,767

An insurer receives $200 million in premiums. The loss ratio is 65% and the expense ratio is 25%. What is the combined ratio after dividends if dividends equal 2% of premiums?

• 90%

• 88%

• 92%

• 50%