Question 1

What funnels premium dollars into separate accounts which means segregated pools of bonds or stocks?

Accepted Answer

Variable life insurance involves investing premium dollars into separate accounts, which are segregated pools of bonds or stocks.

Question 2

The two major asset classes in which life insurers invest are:

Accepted Answer

Life insurers primarily invest in bonds and mortgages as these provide stable and predictable returns, aligning with their long-term liability commitments.

Question 3

A substantial investment is defined as any investment comprising more than 15 percent of an enterprise's voting shares or greater than 35 percent of its equity.

Accepted Answer

The definition of a substantial investment can vary, but it typically involves a significant percentage of ownership or control, often more than 20% of voting shares or equity, not specifically the percentages mentioned.

Question 4

Monetary items and non-monetary items carried at market value are translated into the reporting currency at the rate of exchange in effect on the balance sheet date under:

Accepted Answer

The temporal method translates monetary items at the exchange rate in effect on the balance sheet date, while non-monetary items carried at market value are also translated at the current exchange rate.

Question 5

With traditional whole life insurance:

Accepted Answer

In traditional whole life insurance, the interest rate on reserves is implicit in the premium rate and is locked in at the time of policy issuance, meaning it does not change over the life of the policy.

Question 6

What is characterized by liabilities "shorter" than assets, which can lead to the liquidation of assets at depressed values in times of higher than expected interest rates?

Accepted Answer

Capital value risk occurs when liabilities are shorter than assets, leading to potential asset liquidation at depressed values during unexpected interest rate increases.

Question 7

Investments in equities by a life insurance company may not exceed the total of

Accepted Answer

Life insurance companies are typically subject to regulatory limits on their investments in equities to ensure financial stability and protect policyholders. These limits can include a percentage of regulatory capital and liabilities for both participating and non-participating policies.

Question 8

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

Accepted Answer

The answer of In determining whether an operation is self-sustaining...

Question 9

What is the act in which the main sections are for Canadian companies and for foreign companies?

Accepted Answer

The Insurance Companies Act is the legislation that governs both Canadian and foreign insurance companies operating in Canada.

Question 10

The nature and extent of interest rate risk, credit risk, reinsurance risk and other significant risks should be disclosed is required for:

Accepted Answer

Actuarial liabilities involve future obligations and require disclosure of risks such as interest rate risk, credit risk, and reinsurance risk to ensure transparency and proper risk management.

Question 11

From what the most direct value-based requirements arise which are present in account value accumulation products?

Accepted Answer

The answer of From what the most direct value-based requirements...

Question 12

With fixed deferred annuities;

Accepted Answer

The credited rate for fixed deferred annuities is periodically re-determined and declared by the insurance company, reflecting changes in interest rates and market conditions.

Question 13

Which of the following id NOT the kind of Insurance?

Accepted Answer

The answer of Which of the following id NOT the...

Question 14

_______________ reserves for income tax purposes are referred to as maximum tax actuarial reserves (MTAR) and replace the actuarial liabilities used for accounting purposes in computing taxable income.

Accepted Answer

Policy-related reserves are referred to as maximum tax actuarial reserves (MTAR) for income tax purposes, replacing actuarial liabilities used for accounting in computing taxable income.

Question 15

The potential for loss resulting from changes in market interest rates are known as:

Accepted Answer

Interest rate risk refers to the potential for loss resulting from changes in market interest rates.

Question 16

A holistic analysis in a multi-scenario framework of all significant factors that can affect an insurer's future financial condition is called:

Accepted Answer

Dynamic solvency testing (DST) involves analyzing various scenarios to assess the potential impact on an insurer's financial condition, considering all significant factors.

Question 17

A package of coverage including most property and liability coverage except workers' compensation, automobile insurance and surely bonds is called:

Accepted Answer

Multiple peril insurance provides coverage for various types of property and liability risks, excluding specific coverages like workers' compensation and automobile insurance.

Question 18

Fidelity bonds cover employees against dishonest acts by employees.

Accepted Answer

Fidelity bonds provide protection to businesses against financial losses caused by the fraudulent or dishonest acts of their employees.

Question 19

A mismatch in the timing of asset maturities relative to policy benefits requiring either reinvestment or disinvestment by the insurer at uncertain future interest rates is known as:

Accepted Answer

Maturity Mismatch Risk refers to the risk that arises when the maturities of an insurer's assets do not align with the timing of its liabilities, leading to potential reinvestment or disinvestment at uncertain future interest rates.

Question 20

What features a reserve that accumulates at company declared credited interest rates, which are periodically reset?

Accepted Answer

Universal life insurance features a reserve that accumulates at company declared credited interest rates, which are periodically reset.

Exam 1: Accredited Financial Examiner