CPD Assessment 24.8 Insurance Fundamentals

What is the primary focus of long-term insurance policies?

1. Covering immediate risks
2. Offering financial security against long-term risks
3. Providing coverage for a specific event
4. Tailoring coverage to individual needs

Sarah is considering purchasing a long-term insurance policy and wants to ensure flexibility in premium payments. Which type of long-term insurance policy should she explore?

1. Whole life insurance
2. Endowment policy
3. Disability insurance
4. Funeral cover

Which of the following statements regarding the “surrender of policy” is true?

1. Surrendering a policy has no tax implications.
2. Surrendering a policy means forfeiting the death benefit.
3. Surrender charges are added to the cash surrender value.
4. Surrender of policy is only possible upon the death of the insured.

Alex has a long-term insurance policy and is looking for an option to accumulate funds for his child’s education. Which type of policy should he consider?

1. Disability cover
2. Funeral cover
3. Endowment policy
4. Dread Disease cover

What is the primary characteristic of “New Generation” insurance products in the long-term insurance industry?

1. They have fixed premiums.
2. They do not offer customization.
3. They incorporate modern features and flexibility.
4. They do not have online access.

What does the Consumer Price Index (CPI) measure?

1. They have fixed returns.
2. Policyholders cannot choose their investments.
3. They do not offer growth potential.
4. Policyholders can benefit from market growth.

What is the main distinction between long-term insurance and indemnity insurance according to the “Long-term insurance cover principle”?

1. Long-term insurance allows the policyholder to insure any life, while indemnity insurance has limitations.
2. Long-term insurance is not based on contracts, while indemnity insurance relies on contractual agreements.
3. Long-term insurance lets the policyholder choose their coverage amount, while indemnity insurance has fixed coverage.
4. Long-term insurance is solely for individuals, while indemnity insurance is for businesses.

Which type of life insurance provides life-long protection and usually has fixed premiums that do not change throughout the life of the policy?

1. Term Cover
2. Accidental Cover
3. Whole Life Insurance
4. New Generation Pure Life Products

What does the Balance of Payments (BoP) record?

1. Domestic sales transactions
2. A country’s transactions with foreign countries
3. In-country financial transactions
4. Internal budget allocations

What are composite business cycle indicators used for?

1. Predicting currency values
2. Estimating economic cycles
3. Calculating tax rates
4. Assessing government policies

What is a primary focus of retail trade sales data?

• The number of retail stores
• Employee performance in retail
• Real value of sales
• Impact of marketing strategies

What does the Purchasing Managers’ Index (PMI) indicate?

1. The profitability of manufacturing companies
2. The performance of the manufacturing sector
3. Employment levels in manufacturing
4. The price of manufactured goods

Which of these is not included in other cyclical indicators closely watched in financial markets?

1. Manufacturing production and sales
2. Mining production and sales
3. Agricultural sector performance
4. Wholesale trade sales

What can cause immediate global financial market movements?

1. Release of a major US economic indicator
2. Changes in local cultural trends
3. Domestic sports events
4. Internal political changes

What challenges the predictive value of economic indicators?

1. Lack of data variety
2. Overreliance on historical data
3. Market participants’ short-term outlook
4. Consistent data accuracy

What forms the basis of neo-classical economists’ theory of market movements?

1. Unpredictable economic conditions
2. Predictable economic man driven by a consistent value system
3. Constantly changing market trends
4. Random financial decisions by investors

What is the ceteris paribus assumption used for in economic prediction?

1. Considering all variables simultaneously
2. Assuming one economic indicator is influencing the financial markets
3. Ignoring market participant behavior
4. Predicting long-term economic trends

How do retail sales data affect financial markets?

1. No impact on equity prices
2. Strong sales are positive for equity prices
3. Weak sales lead to bond price rises
4. Strong sales increase bond prices and decrease yields

 What does the employment rate indicate in the US context?

1. Strength of the US economy
2. The number of people employed in agriculture
3. The effectiveness of government policies
4. The rate of technological advancement

What is the main purpose of the Balance of Payments (BoP)?

1. To measure the country’s debt levels
2. To record a country’s transactions with foreign countries
3. To evaluate the efficiency of government spending
4. To track the changes in national GDP