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ALU 202 Exam With Actual Questions And Verified Detailed Answers Latest Update % Pass Guaranteed
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ALU 202 Exam With Actual Questions And Verified DetailedAnswers Latest Update 2024-2025 100% Pass Guaranteed
Underwriting criteria generally used in the pricing of preferred policies include which of
the following?
A. blood pressure
B. cholesterol/HDL ratios
C. family history
Answer Choices:
1. B only is correct.
2. C only is correct.
3. A and B only are correct.
4. A, B, and C are correct. - Answer Answer 4: A, B, and C are correct - page 3.
All the following are life insurance pricing components that are established by
regulation EXCEPT:
1. reserve basis
2. tax law
3. non-forfeiture laws
4. asset risk Answer Answer 4: asset risk - pages 6-7.
Which of the following best describes how the relationship of mortality savings from a
requirement to the cost of administering the requirement:
,1. surplus value
2. protective value
3. business value
4. reserve value Answer Answer 2: protective value - page 8.
What components does the actuary consider in pricing new products? - Answer Refer to
page 3.
Describe the types of risk that the available surplus must cover. - Page 2
The following statements about a protective value study of underwriting requirements
are all correct EXCEPT:
1. It should evaluate which requirement disclosed the underlying impairment.
2. It should discuss the applicant's response to accepting or rejecting the policy offered.
3. It should quantify select and ultimate mortality differential.
4. It should ensure that the product offered is "at the market." - Answer Answer 3: It
should measure the difference between select and ultimate mortality—pages 8-9.
A safety net that needs to be provided beyond the level of reserves being held in case a
company's mortality experience turns out to be much worse than expected is called:
1. risk-based capital
2. reserve basis
3. statutory reserve
4. deferred acquisition cost - Answer Answer 1: risk-based capital—page 7.
What items are included in the expense levels that are built into product pricing? -
Answer Refer to page 5.
,Name four factors that could affect the profitability of a product and explain in what way
profitability could be affected. - Answer Refer to pages 3-6.
Describe how exceptions can affect the profitability and mortality of a product. - Answer
Refer to page 11.
The average percent of premium that is assigned to cover mortality for direct carriers
is:
1. 30%
2. 50%
3. 75%
4. 90% - Answer Answer 2: 50% - page 20.
Company will revise existing cost benefit studies when which of the following occurs?
A. pricing changes
B. competitive dynamics
C. actual experience
Answer Choices:
1. A only is correct.
2. C only is correct.
3. A and B only are correct
4. A, B and C are correct. - Answer Answer 4: A, B and C are correct - page 19.
Given a table 8 (200 debit) average rating, which of the following is the result of a hit rate
of 3%?
, 1. 6% less profit margin
2. 6% more mortality
3. 3% more mortality
4. 6% decrease in mortality - Answer Answer 2: 6% increase in mortality - pp 20-21.
What is the sentinel effect? - Answer See page 21.
Define and describe the pricing horizon of a cost/benefit study. - Answer See pp 22-23.
Which of the following statements about cost/benefit studies is correct?
A. It is based on the historical mortality found by a requirement being studied.
B. It assumes mortality plays out according to underwriting guidelines.
C. Interest and lapse rates are not embedded into the results.
Answer Choices:
1. B only is correct
2. A and B only are correct.
3. B and C only are correct.
4. A, B, and C are correct. - Answer Answer 1: B only is correct - pages 22-23.
Actuaries will develop a double decrement table that take which of the following two
factors into account?
1. ratings and declines
2. lapses and deaths
3. placed and non-placed cases
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