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Skill Front Certified Insurance Industry Fundamentals™ (CIIF™) Exam Answers

100% FREE Certified Insurance Industry Fundamentals™ (CIIF™)

  • CERTIFICATION: Certified Insurance Industry Fundamentals™ (CIIF™) (USD 297.- Value)
  • BONUS PROGRAM E-BOOK: 82 Pages (USD 97.- Value)
  • BONUS PROGRAM AUDIOBOOK: 52 Minutes, 57 Seconds (USD 50.- Value)
  • SHAREABLE & VERIFIABLE DIGITAL BADGE: Your Name Engraved On It, Custom Made For You (USD 99.- Value)

The Skills You’ll Learn:

This certification program will introduce the participants to the basic mechanism of insurance. We are covering the history of insurance, and the concepts which were already understood by the Romans and which are still at the core of this industry today.

Based on the history, we are introducing the concepts of risk pooling, risk transfer and the management of reserves.

This first level also describes the main products and insurance business lines.

Target Group: All people that want to know about the functioning of the insurance industry but also its “language”. Ideal for example for interns and career changers. Employees from insurers and reinsurers (accounting, finance department, IT and all organizational functions)

Subjects Covered:

  • CHAPTER 1. Risk Pooling and cash management: When did it start and what did our ancestors discover which is still being used today?
  • CHAPTER 2. What were the first insurance policies issued?
  • CHAPTER 3. What is the aim of insurance? And what does it bring to our societies?
  • CHAPTER 4. What is at the core of “modern insurance”?
  • CHAPTER 5. What are the main business lines (General insurance also called Property & Casualty, life insurance, savings accounts, etc) and products?
  • CHAPTER 6. How are insurers able to fulfill their promises? Introduction to the asset & liability matching concepts.
  • CHAPTER 7. What is the size of the global insurance market?
  • CHAPTER 8. What are the legal requirements for insurance (Premium, Excess, Limit of insurance covers, etc)? We are also covering the insurance premium and what is its “well preserved” secret?
  • CHAPTER 9. What are the main contractual requirements and the elements of insurance contracts?
  • CHAPTER 10. What is the business model of insurers? And how do they make profits? We are covering at a high level their cash flow and introduce you to the concept of solvency (more about this in other programs)
  • CHAPTER 11. What are the principles of claims management?

Skill Front Certified Insurance Industry Fundamentals™ (CIIF™) Exam Answers

  • To mitigate the risk of losing all their merchandise in the Yangtze River, it is better to move the good by land transportation
  • The Chinese Merchants could buy an insurance cover from the Chinese state
  • The Merchants could reduce their potential losses by mutualizing their risks
  • It is better to keep all their merchandise on one boat and accept the risk of having a total loss in case their boat sinks
  • You are better off to have your boat to sink with your merchandise than paying back the lender who financed your venture
  • Without financing facilities, you cannot ship your goods to another country
  • The risk of losing your investment is so high that it is better to not export any goods
  • The financial consequences of an existing risk could be transferred for an agreed amount to a third party
  • The Romans understood that this was the best way to encourage people to take risks in exporting goods to their colonies
  • Like the Chinese before them, the Romans understood that mutualization the risks made it possible to bear some losses
  • People would accept to pay a higher interest rate on a loan in order to cover the risk of a loss
  • All the above
  • An insurance cover which was separated from a loan
  • A written contract which stipulated what was the covered risk and its premium. We are calling this today an insurance policy
  • The possibility to share the risk among several insurers. We are calling this today “coinsurance”
  • All the above
  • It is better to have a healthy life in order to minimize the risk of death
  • We can mutualise the risk of death and create a “pool” of funds to provide financial protection to the participants in the pool. Death can be covered.
  • If you do not put money aside in your lifetime, it is difficult to get a nice burial ceremony
  • All of the above
  • They had to limit what they were paying in order to ensure that they had enough money in the pool
  • They needed to increase the premiums regularly to always have enough in the pool of money
  • Like insurers today, they could increase their pool of money by investing into real estates but also through moneylending to others
  • They would never be able to collect enough premium to cover their liabilities
  • They understood that the interests earned on their investment would be sufficient to pay the annuities
  • They limited the payments to a short period
  • They selected their clients based on their age, the older the better
  • They put in place mortality table to help them to estimate the life expectancy of their clients thus adjusting the future annuity payments
  • They put in place guarantees which would cover the extra costs of life
  • Like insurers today, they were providing the possibility to add Cost of Living Adjustments (COLAs) to an annuity contract
  • They did not know how to do this, how could they come up with the additional premium to cover such risk?
  • They reduced the period to pay out an annuity
  • They were worried to not be able to pay on time to their insured
  • They would pay an annuity to the wrong person
  • They would not have enough reserves to pay the future annuities
  • They would face frauds with the insured being deceased without knowing about it
  • Insurance is a transfer of risk from one person to another party
  • For insurance, the transfer of risk is done against the payment of an amount of money (a premium)
  • Insurance acts as a protection
  • All above statements are correct
  • Privately-owned structures
  • Policyholders-owned structures also called Mutual
  • State-owned structures
  • All of the above
  • In the field of insurance, the Law of Large Numbers is used to predict the risk of loss or claims of some participants so that the premium can be calculated appropriately.
  • The larger the population is calculated, the more accurate predictions. In the field of insurance, the Law of Large Numbers is used to predict the risk of loss.
  • The law of large numbers is a statistical concept that relates to probability. It is one of the factors insurance companies use to determine their rates.
  • All the above
  • These contracts would pay any reparation without reasons
  • These policies are “all inclusive” and therefore cover any risks for the insured
  • These contracts are paying an indemnity on a regular basis to the clients
  • These insurance contracts are “indemnity contracts” because if a loss (accident) does not occur, the insurers do not have to pay anything.
  • Accident & Health, death covers and investment accounts
  • Pension products, Accident & Health and death covers
  • Pension products and death covers
  • Pure protection products (e.g. payment of a benefit in the event of death) and (ii) savings policies (e.g. the growth of capital with regular or singular premium invested in specific asset classes) combined with a death cover.
  • Like squirrels, insurers are investing their assets in different location to avoid that their competitors grab these investments
  • Like squirrels, insurers are reducing their risk of losses on their investment by diversifying their portfolio thus investing in different asset classes
  • Like squirrels with their nuts, insurers are investing in limited asset classes stocks and bonds
  • They are savings in order to have cash for future payments
  • Household insurance
  • Personal insurance
  • Travel insurance
  • Motor insurance
  • The risk must be clearly identified in the policy
  • The client must sign the insurance contract to have a cover
  • Regardless of the claims type, the insurer must pay
  • The insured must have an interest in the risk covered
  • A clause which describes all the exclusions in the contract
  • The premium reduction offered to the client
  • In case of claim, the amount that the insured will have to pay before the insurer pays its share
  • The amount of the premium which can be deducted from the insured’s tax return
  • The limit of the payment that the insured will have to pay in the case of a claim
  • In the case of a claim with a third party, the maximum amount that would be paid to the third party for a dispute
  • It is the maximum amount for which an insurer is liable under a given contract
  • The amount that an insured owes to an insurer in the case of a claim
  • The cover starts at the date which is stipulated on the contract
  • The cover starts only if a premium is paid
  • The cover starts only when the premium is paid and at the date stipulated on the contract
  • The cover starts when a contract is signed
  • The insurers must have the operations in place to manage their clients’ policies
  • The insurers must be able to service the claims of their customers
  • The insurers must compute the right premium for the risks that they are covering
  • The insurers must set up balance sheets reserves to ensure that they can pas any claims, losses or benefits promised to their customers
  • The premiums paid by the clients
  • The income from the investments of the collected premiums
  • The recoveries of claims from reinsurers
  • All of the above
  • The insurers must invest the collected premium before paying a claim
  • The insurers must have collected enough premium before paying a claim
  • Regulators have imposed a solvency risk model to ensure that Insurers have the necessary “buffers” to be better able to withstand significant losses and unknowns.
  • The issuance of capital to shareholders to withstand major losses
  • The operating profit went up
  • The earnings before taxes went up
  • The Solvency II ratio improved
  • All the above
  • More profits to the shareholders
  • A better balance sheet
  • An increase to the shareholders’ equity
  • A destruction of value – the profits attributable to shareholders got reduced
  • The insurers are offering guaranteed rates of return
  • The investments offered by the insurers are safer
  • The transfer of the accumulated savings to our heirs is usually tax free
  • The insurers have a lower risk of bankruptcy than banks
  • The customers will find the products unattractive as they can earn more when investing in the stock market on their own
  • The customers will not understand that a small part of their premium does not get invested
  • The guaranteed rate of return is higher than what the insurer can earn when investing the collected premium
  • The clients ask for a better rate of return some years later
  • The customers do not have a guaranteed rate of return
  • The Terms & Conditions are difficult to understand for the clients
  • The brokers and/or agents selling them are receiving a rather high commission
  • They offer three benefits to the customers: a life cover, tax savings and wealth creation. As a result, the clients are often surprised with poor returns in the early years of the plan.
  • A way for the clients to create a savings pool for their future
  • An insurance which covers annually a risk
  • A life insurance product which covers the risk of a death of a person as long as the premium is paid on time
  • It is a contract that provides an income for a specified period, such as several years or for life
  • The beneficiaries can get a full payment of the lump sum
  • The beneficiaries can invest the benefits in another insurance product
  • The beneficiaries can receive an annuity payment or a lump sum payment
  • The insured can get a deferred payment in case of death

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