IIA IIA Certifications IIA-CFSA Questions & Answers

• Question 301:

  Whole life policies offer lifetime coverage at a level premium rate that does not increase as the insured ages. Whole life policies are classified in all of the below mentioned categories EXCEPT:

  A. Continuous premium policies

  B. Limited payment policies

  C. Decreasing life policies

  D. Single premium policies

  Correct Answer: C

• Question 302:

  Whole life policies accrue a cash value that the insurer must surrender to the policyholder if the policy does not remain in force until the policyholder's death. The actual cash value payable to the policyholder in this circumstance would be:

  A. Plus any surrender charges

  B. Less any surrender charges

  C. Plus policy repayments outstanding

  D. Less any surrender charges and policy repayments outstanding

  Correct Answer: D

• Question 303:

  Insurance companies assist individuals in managing personal risk through risk pooling. Risk pooling is based on fact that the probability of any one type of loss occurring for a given individual is small. Therefore insurers can insure:

  A. A large number of people against a given peril, based on the knowledge that only a smallpercentage of those insured will ever file a claim for the particular peril

  B. Only few people against a given peril, based on the knowledge that only a small percentage of those insured will ever file a claim for the particular peril

  C. A large number of people against a given peril, based on the knowledge that a largepercentage of those insured will ever file a claim for the particular peril

  D. None of these

  Correct Answer: A

• Question 304:

  Insurance contracts are also considered ____________ in that they are legal documents that required the insurer to pay if covered events occur. Because the insurance company creates the contract, it is liable if there are any ambiguities in the contract language.

  A. Contracts of adhesion

  B. Bilateral

  C. Unilateral

  D. Incontestable

  Correct Answer: A

• Question 305:

  Insurance is a method of transferring, for a fee, the financing responsibility for the risk to another party. Insurance polices are legal contracts. There are four elements that constitute a legal, binding contract. Which of the following is NOT out of those elements?

  A. Agreement

  B. Periodic review

  C. Competent parties

  D. Legal purpose

  Correct Answer: B

• Question 306:

  It is a characteristic of insurance policy according to which the insured decides whether or not to pay the premium to be covered by the policy. If the insured pays the premium, the insurance coma pay is obliged to make payments as stated in the policy. What is it?

  A. Unilateral

  B. Bilateral

  C. Incontestable

  D. Adhesion

  Correct Answer: A

• Question 307:

  "A valid contract involves each party giving something of value. This exchange of value, or consideration, may take the form of money, action, or promise. For insurance contracts, the insured's consideration is the payment or premiums and a promise to fulfill the conditions of the contracts, and the insurer's consideration is the promise to pay after a loss occurs." This is related to an element in an insurance policy contract. It is known as:

  A. Agreement

  B. Consideration

  C. Competent parties

  D. Legal purpose

  Correct Answer: B

• Question 308:

  Reviewing counterparties for creditworthiness and obtaining master trade agreements and credit approval for counterparties before entering into a repurchase or reverse repurchase agreement Obtaining collateral from the counterparty Marking to market all collateral daily; if a deficit (within established guidelines) exists, additional collateral may be obtained from the counterparty Reconciling the repurchase and reverse repurchase subsidiary ledgers to the stock record and general ledger daily. Out-of-balances are recorded as suspense items and researched immediately These are actually:

  A. Control and monitoring activities related to purchase and reverse purchase agreement

  B. Review activities where broker-dealer dealers finance proprietary or customer activitythrough collateralized bank

  C. Auditors should be aware of the following control and monitoring activities typicallyassociated with securities lending

  D. None of these

  Correct Answer: A

• Question 309:

  Which of the following activity/ies should be considered by the auditors whenever reviewing situations where broker-dealer finance proprietary or customer activity through collateralized bank loans?

  A. Ensuring that customer, noncustomer, and firm bank loans are separately maintained and that procedures are in place to prevent commingling of collateral

  B. Maintaining separate accounts in the general ledger for the securities collateralizing eachloan

  C. Obtaining collateral from the counterparty

  D. Reconciling the repurchase and reverse repurchase subsidiary ledgers to the stock record and general ledger daily. Out-of-balances are recorded as suspense items and researchedimmediately

  Correct Answer: AB

• Question 310:

  Auditors should be aware of the following control and monitoring activities typically associated with securities lending EXCEPT:

  A. Reviewing counterparties for credit worthiness and obtaining master trade agreements andcredit approval for counterparties before entering into stock-loan or stock-borrow transaction

  B. Establishing transaction limits by counterparty

  C. Obtaining physical possession or control of all collateral

  D. Establishing position and credit limits by counterparty

  Correct Answer: D