Online AFE Questions Video

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Question 36

Insurers issuing participating policies sometimes incur dividends which have been earned but which have not been disbursed or otherwise credited as of the financial statement date. Such dividends represent a due and unpaid liability amount. Reasons why dividends may be due and unpaid include all of the following EXCEPT:

Options:

Premium payment transactions not recorded within the last processing cycle for the reporting period.

All premiums paid to the anniversary date

The policy anniversary date is near the end of the calendar year and the policyholder has elected to receive dividends in cash, but the cash dividend has not yet been disbursed

The policy anniversary date is near the end of the calendar year and the policyholder has elected to have the dividend reduce the premiums, but the premium for the next policy year has not yet been received

Question 37

Duration is a measure of the first-order interest rate sensitivity of a financial instrument.

Options:

True

False

Question 38

On both old and new business, companies can also avoid premium notes by entering into agreements involving deposits of a portion of the premium with an extension on the balance. These deposits are treated as: