4. An insurance company needs __ liquidity if its claims are predictable.

4. An insurance company needs ______ liquidity if its claims are ____ predictable.

A.        less; less
B.         more; more
C.         less; more
D.        more; less
E.         claim predictability doesn’t impact liquidity

5. Life insurance companies do not have ____ as a typical source of funds.

A.        Deposit insurance premiums
B.         Annuity plans
C.         Investment income
D.        Life insurance premiums
E.         Health insurance premiums

6. Policyholders can borrow from their Life Insurance Company against their policies in __________

A.        endowment loans
B.         ordinary life loans
C.         policy loans
D.        separate account loans
E.         surrender value loans

Expert Solution

Answer 4)

The corect option is D.

When the Predictability of claims is less the insurance company needs more liquidity. As the need of urgency arises so the claims may be more than anticipated and hence needs more cash or liquidity to support the claims.

Answer 5)

The correct Option is A. Deposit insurance premiums is not a typical source of funds to life insurance companies.

The other options Annuity plans, Investment income, Life insurance premiums, Health insurance premiums are all soure of funds for life insurance companies.

Answer 6)

The correct option is A. The individual can borrow from the life insurance company when it is a traditional plan or endowemnet plan. The other loans are possible for money black plans and wholelife insurance plans.

The other options plans B,C D and E will not grant loans for the individual.

jeff jeffy answered 2 years ago

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