Question 1

Which of the following is NOT the category of Life and health insurers in Canada?

Accepted Answer

A)  Canadian Companies 
B)  Fraternal Benefit Societies 
C)  Reassurance Companies 
D)  Provincially Licensed Companies 
A)  Canadian Companies 
B)  Fraternal Benefit Societies 
C)  Reassurance Companies 
D)  Provincially Licensed Companies C

Question 2

Procedures for ensuring that the data used by the loss reserve specialist is completed and accurate due to:

Accepted Answer

A)  Controls over the preparation of managerial data 
B)  Controls over the preparation of accounting estimates 
C)  Controls over the preparation of supporting data 
D)  Controls over the preparation of assumed alternatives 
A)  Controls over the preparation of managerial data 
B)  Controls over the preparation of accounting estimates 
C)  Controls over the preparation of supporting data 
D)  Controls over the preparation of assumed alternatives C

Question 3

The ten largest companies account for what percent of life insurance sales in Canada?

Accepted Answer

A)  less than 50 percent 
B)  more than 65 percent 
C)  more than 75 percent 
D)  less than 80 percent 
A)  less than 50 percent 
B)  more than 65 percent 
C)  more than 75 percent 
D)  less than 80 percent C

Question 4

It usually is acceptable to use the subsidiary's statements if the difference in fiscal periods is:

Accepted Answer

A)  not more than 2 months 
B)  not more than 3 months 
C)  not more than 4 months 
D)  not more than 5months 
A)  not more than 2 months 
B)  not more than 3 months 
C)  not more than 4 months 
D)  not more than 5months

Question 5

The pro rata portion of premiums written allocable to unexpired policy periods represents unearned premiums, which are reflected as in the balance sheet.

Accepted Answer

A)  Liabilities 
B)  Expenses 
C)  Revenues 
D)  None of the above 
A)  Liabilities 
B)  Expenses 
C)  Revenues 
D)  None of the above

Question 6

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

Accepted Answer

A)  Variable life insurance 
B)  Periodic life insurance 
C)  Insurance plan 
D)  Isolated Interest rate 
A)  Variable life insurance 
B)  Periodic life insurance 
C)  Insurance plan 
D)  Isolated Interest rate

Question 7

Identification and documentation of the controls and policies which address the risk management issues for each of the Standards is the necessary step for:

Accepted Answer

A)  Operational procedure 
B)  Guideline procedure 
C)  Organizational policy 
D)  Self-assessment process 
A)  Operational procedure 
B)  Guideline procedure 
C)  Organizational policy 
D)  Self-assessment process

Question 8

The highest and best use of the asset is ______________, if the asset would provide maximum value to market participants principally on the standalone basis.

Accepted Answer

A)  in-exchange 
B)  in-use 
C)  in-market 
D)  in-sale 
A)  in-exchange 
B)  in-use 
C)  in-market 
D)  in-sale

Question 9

For immediate annuities, this is the ______________, defined by the sequence of periodic annuity benefit payments the policyholder is promised.

Accepted Answer

A)  maximum credited rate 
B)  minimum credited rate 
C)  implicit interest rate 
D)  explicit interest rate 
A)  maximum credited rate 
B)  minimum credited rate 
C)  implicit interest rate 
D)  explicit interest rate

Question 10

A premium deficiency relating to which insurance contracts indicate a probable loss on premiums yet to be earned.

Accepted Answer

A)  long duration 
B)  premium policy 
C)  short duration 
D)  None of the above 
A)  long duration 
B)  premium policy 
C)  short duration 
D)  None of the above

Question 11

Which of the following is Correct?

Accepted Answer

A)  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio. 
B)  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio. 
C)  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio. 
D)  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio. 
A)  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio. 
B)  the financial position of an entity with a 2-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 4-to-1 ratio. 
C)  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is less affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio. 
D)  the financial position of an entity with a 4-to-1 reserve-to-surplus ratio is more affected by variability in its loss reserves than is an entity operating at 2-to-1 ratio.

Question 12

What is based on statistical data and are large groups of similar risks can be classified by a few and easily identifiable characteristics and result in standard rates?

Accepted Answer

A)  Numerical rating 
B)  Premium rating 
C)  Manual rating 
D)  Item rating 
A)  Numerical rating 
B)  Premium rating 
C)  Manual rating 
D)  Item rating

Question 13

By quantifying interest rate sensitivity, investment risk and can also indicate corrective actions.

Accepted Answer

A)  Experimental measure 
B)  Investment measures 
C)  Quantifiable measures 
D)  Duration measure 
A)  Experimental measure 
B)  Investment measures 
C)  Quantifiable measures 
D)  Duration measure

Question 14

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

A)  Insurance resting (IT) 
B)  Dynamic solvency testing (DST) 
C)  Financial testing (AT) 
D)  Adequacy testing (AT) 
A)  Insurance resting (IT) 
B)  Dynamic solvency testing (DST) 
C)  Financial testing (AT) 
D)  Adequacy testing (AT)

Question 15

The estimated liability includes the amount of money that will be used for future payments of:

Accepted Answer

A)  Reported claims to insurer 
B)  Claims related to insured events 
C)  Claim adjustment expenses 
D)  All of the above 
A)  Reported claims to insurer 
B)  Claims related to insured events 
C)  Claim adjustment expenses 
D)  All of the above

Question 16

Who is responsible for accounting for customer remittance advices and the agent's current account?

Accepted Answer

A)  Accounts department 
B)  Customer release policy 
C)  Payment policy 
D)  Premium collection department 
A)  Accounts department 
B)  Customer release policy 
C)  Payment policy 
D)  Premium collection department

Question 17

An entity method is applied to corporate joint ventures and to investments in certain less than majority-owned companies in circumstances where:

Accepted Answer

A)  the investment is for the long term 
B)  the investor company has the ability to exercise significant influence over the operating and financial policies of the investee company. 
C)  Both A & B 
D)  Neither A nor B 
A)  the investment is for the long term 
B)  the investor company has the ability to exercise significant influence over the operating and financial policies of the investee company. 
C)  Both A & B 
D)  Neither A nor B

Question 18

is provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.

Accepted Answer

A)  Enterprise evidence 
B)  Property evidence 
C)  Audit evidence 
D)  Regulatory evidence 
A)  Enterprise evidence 
B)  Property evidence 
C)  Audit evidence 
D)  Regulatory evidence

Question 19

The loss reserve estimate is a significant estimate in the financial statements of an uninsured entity.

Accepted Answer

A) True 
 B)False

Question 20

In many states, a claims-made insurance policy is required to:

Accepted Answer

A)  contain an extended-reporting clause 
B)  provide for purchase, at the policyholder's option 
C)  provide for automatic tail coverage 
D)  All of the above 
A)  contain an extended-reporting clause 
B)  provide for purchase, at the policyholder's option 
C)  provide for automatic tail coverage 
D)  All of the above

Exam 1: Accredited Financial Examiner