Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam - Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam

Question 1

Under Part 4 of the Life Insurance Act 1995 (Cth), what is the statutory requirement regarding 'Statutory Funds' for Australian registered life insurance companies?

A life company must establish and maintain one or more statutory funds, and must keep the assets and liabilities of each statutory fund strictly distinct and separate from the assets of the company's other funds and the shareholders' fund A life company must hold all policyholder premiums in an unrestricted general bank account shared with all commercial subsidiaries A life company is prohibited from establishing more than one statutory fund under any circumstances A life company must invest all statutory fund assets in physical currency stored in cash vaults

Correct Answer:

Question 2

Under APRA Prudential Standard LPS 110 (Capital Adequacy), what is the regulatory capital requirement that an Australian life company must meet, and at what level is it applied?

The capital base must exceed the Prescribed Capital Amount, and the requirement applies to each statutory fund and to the company as a whole Common Equity Tier 1 capital must exceed total policyholder liabilities for the company as a whole only Annual premium income must exceed the maximum death benefit sum insured in each statutory fund A cash settlement reserve must be held equal to the previous year's reinsurance recoveries

Correct Answer:

The capital base must exceed the Prescribed Capital Amount, and the requirement applies to each statutory fund and to the company as a whole

Question 3

Under accounting standard AASB 17 (Insurance Contracts), how is the 'Contractual Service Margin' (CSM) defined for a group of life insurance contracts at initial recognition under the General Measurement Model (GMM)?

A component of the asset or liability that represents the unearned profit the insurer will recognize as it provides insurance contract services in the future, measured as the excess of expected present value of inflows over outflows and risk adjustment The total commissions paid to retail financial advisers at policy inception The statutory tax paid to the Australian Taxation Office on investment earnings The penalty fee charged to policyholders who cancel their policy within 30 days

Correct Answer:

Question 4

A cohort of 10-year term life policies is underwritten. At initial recognition, the Present Value of Future Cash Inflows (premiums) is AUD 50,000,000, the Present Value of Future Cash Outflows (claims, expenses) is AUD 38,000,000, and the Risk Adjustment for non-financial risk is AUD 4,000,000. Under AASB 17, what is the initial Contractual Service Margin (CSM) for this cohort?

AUD 8,000,000 AUD 12,000,000 AUD 50,000,000 AUD 4,000,000

Correct Answer:

AUD 8,000,000

Question 5

In Australian retail life insurance product design, what was the primary driver of the severe multi-billion dollar industry losses in 'Individual Disability Income Insurance' (IDII / Income Protection) over the decade leading up to 2020?

Flawed product design featuring loose 'own occupation' disability definitions to age 65, high replacement ratios (>75-85%), agreed-value benefits, and generous ancillary add-ons that created significant moral hazard and disincentives to return to work A sudden catastrophic doubling of mortality rates among young drivers A complete collapse in the Australian commercial property market A statutory ban by APRA on charging annual premiums

Correct Answer:

Question 1

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Prepare with the Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam practice quiz. This question bank includes 100 questions covering life, insurance, risk, australian, and apra. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam

This practice set contains 100 questions from the matching question bank and focuses on life, insurance, risk, australian, and apra. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam

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