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Insurance Contract - QUIZ
Insurance Contract - QUIZ
Insurance Contract - QUIZ
3. Under an insurance contract, the party that has a right to compensation if the insured event occurs is referred
to as the insurer.
A. True
B. False
C. a or b
D. None of the above
7. A group of insurance contracts is recognized from the earliest of the following except
a. The ending of the coverage period of the group of contracts
b. The beginning of the coverage period of the group of contracts
c. The date when first payment from a policyholder in the group becomes due
d. For a group of onerous contracts, when the group becomes onerous
10. S1: Variable Fee Approach does not apply to reinsurance contract held
S2: Reinsurance contract held can be onerous
a. True, True
b. False, False
c. True, False
d. False, True
11. IFRS 17 Insurance Contracts distinguishes between three different kinds of components that have to be
accounted for separately. Which of the following is not included?
a. Promise to transfer distinct goods or distinct non-insurance service
b. Embedded derivatives
c. Investment components
d. Promise to transfer non-distinct goods or non-distinct non-insurance service
12. It is a component of the carrying amount of the asset or liability for a group of insurance contract
representing the unearned profit that the entity will recognize as it provides services under the insurance
contracts in the group.
a. Premium Allocation Approach
b. Contractual Service Margin
c. General model
d. Variable Fee Approach
13. Contract under which one party (issuer) accepts significant insurance risk from another party(policyholder)
by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the
policyholder
a. Reinsurance contract
b. Insurance contract
c. Onerous contracts
d. Retrocession
14. S1- If contract are onerous, gain should be recognized immediately in profit or loss
S2 - A group of insurance contracts is onerous at recognition if the total of insurance acquisition cash flow, cash
flow occurring on initial recognition of the insurance contracts and fulfillment cash flow result in a net cash
inflow
a. True, True
b. False, False
c. True, False
d. Fasle, True
17. It is an arrangement whereby the reinsurer agrees to indemnify the principal ceding insurer against the loss
which the latter may sustain under the policy that the insurer has written
a.Reinsurance
b.Claims
c.Acquisition costs
d.Pipeline Premiums
18. It is an insurer that reinsures part or the whole of a risk with one or more reinsurers. The risk reinsured is
referred to as an outward reinsurance.
a. Reinsurer
b. Ceding insurer
c. Beneficiary
d. Victim
19. .It is an insurer which accepts part of a risk from ceding insurer by way of reinsurance. The risk is accepted
is referred to as an inward reinsurance.
a. Reinsurer
b. Ceding insurer
c. Beneficiary
d. Victim
20.It is defined as reinsurance assumed where the reinsurer will retrocede a whole or a part of risk accepted
from the direct insurer to another reinsurer
a. Reinsurer
b. Ceding insurer
c. Beneficiary
d. Retrocession
21. S1: Reinsurance contracts held can be onerous. Hence, the requirements of the general model for onerous
contracts should apply.
S2: The premium allocation approach maybe applied to reinsurance contracts held, but modified to reflect the
features of reinsurance contracts held that differ from insurance contracts issued.
a. S1 is true
b. S2 is true
c. S1 & S2 are correct.
d. S1 & S2 are wrong.
23. S1: At initial recognition, there is no difference between the contractual service margin determined applying
the general accounting model and that determined applying the variable fee approach.
S2: Subsequent changes in estimates of the fulfillment cash flows that relate to future coverage adjust the
contractual service margin.
a. S1 is true
b. S2 is true
c. S1 & S2 are correct.
d. S1 & S2 are wrong.
25. To obtain and place insurance coverage, an insurance buyer and insurance company agree to enter into a
legal contract called a(an) ______
A.) Contract
B.) Agreement
C.) Policy
D.) None of the above
26. The policy does not became a contract until the applicant accepts the company's offer by paying the initial
premium.
a. True
b. False
c. a or b
d. None of the above
29. S1 - the consideration for the insurer under an insurance contract is premium
S2 - the consideration for an insured under an insurance contract is premium
A. Both statements are correct
B. Both statements are incorrect
C. Statement A is correct
D. Statement B is correct
30. Reinsurance contracts issued are similar to direct insurance contracts issued, and they should be accounted
for by the reinsurer using:
B. Yes No No
C. Yes No Yes
D. Yes Yes No
31. S1: A contract that transfers only an insignificant insurance risk is an insurance contract for as long as the
issuer explicitly regards them as insurance contracts.
S2: A contract that transfers only an insignificant insurance risk is not an insurance contract.
a. Only statement 1 is true.
b. Only statement 2 is true.
c. Both statements are true.
d. Both statements are false.
32. S1: Insurance Service Expense shall exclude any investment component.
S2: Insurance Revenue shall include any investment component.
a. Only statement 1 is true.
b.Only statement 2 is true.
c.Both statements are true.
d.Both statements are false.
33. S1 - Income and expenses from insurance contracts issued are presented together with income or expenses
from reinsurance contracts held.
S2 - Income and expenses from reinsurance contracts held are presented separately from income or
expenses from insurance contracts issued.
a. Only statement 1 is true.
b. Only statement 2 is true.
c. Both statements are true.
d. Both statements are false.
34. S1 - Reconciliation of changes in insurance liabilities, reinsurance assets and, if any related deferred
acquisition costs are mandated by IFRS 15.
S2 - Reconciliation of changes in insurance liabilities, reinsurance assets and, if any related deferred
acquisition costs are not mandated by IFRS 4.
a. Only statement 1 is true.
b. Only statement 2 is true.
c. Both statements are true.
d. Both statements are false.
36. Under the general model of IFRS 17, a group of insurance contracts is initially measured at:
a. the fulfillment cash flows
b. the contractual service margin
c. a or b
d. sum of a and b
37. Which of the following types of insurance contract would probably not be covered by IFRS 17?
a. motor insurance
b. life insurance
c. medical insurance
d. pension plan
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