100+ Free IAI SA2 Practice Questions

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2026 Statistics

Key Facts: IAI SA2 Exam

~3h15m

Exam Duration

IAI exam format

150%

Solvency Control Level

IRDAI regulations

90/10

Par Surplus Rule

IRDAI par-fund rule

Ind AS 117

Insurance Reporting

MCA notification 2024

Apr 2024

IRDAI Actuarial Regs

IRDAI 2024 regulations

100

Practice Questions

OpenExamPrep set

IAI Subject SA2 is a written specialist-advanced application paper (about 3 hours 15 minutes) that requires candidates to apply actuarial judgement to complex Indian life insurance scenarios. It is the India-jurisdiction counterpart to IFoA SA2, building on the SP2 Life Insurance Principles material. SA2 covers IRDAI regulation (including the 2024 actuarial, finance and investment regulations and the 150% solvency control level), product design and pricing, valuation and reserving (including Ind AS 117), embedded value, the 90/10 with-profits rule, unit-linked business, capital and solvency, distribution, taxation, and risk management. IAI sets the pass mark for each sitting rather than publishing a fixed percentage.

Sample IAI SA2 Practice Questions

Try these sample questions to test your IAI SA2 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under IRDAI's solvency framework, every Indian life insurer must at all times maintain a control level of solvency expressed as a solvency ratio of at least:

A.150%

B.120%

C.100%

D.200%

Explanation: IRDAI requires insurers to maintain a control level of solvency equal to a solvency ratio of 150% at all times. The ratio is Available Solvency Margin divided by Required Solvency Margin; falling below 150% triggers regulatory intervention.

2In a conventional Indian with-profits (participating) fund, the regulatory cap on the proportion of distributed surplus that may be allocated to shareholders is:

A.5%

B.10%

C.20%

D.33%

Explanation: Indian with-profits business follows the 90/10 rule: at least 90% of the surplus distributed from the participating fund must go to policyholders and no more than 10% to shareholders. This protects participating policyholders' reasonable expectations.

3The senior actuary who carries statutory responsibility for an Indian life insurer's reserving, solvency certification and policyholder fairness is known as the:

A.Chief Risk Officer

B.With-Profits Actuary

C.Appointed Actuary

D.Statutory Auditor

Explanation: The Appointed Actuary holds the statutory role defined under IRDAI regulations, responsible for valuation of liabilities, solvency monitoring, product certification and ensuring fair treatment of policyholders. The position is unique to each insurer and reports to the board.

4Which IRDAI regulations consolidated and replaced earlier rules on appointed actuaries, asset-liability-solvency and investment functions with effect from 1 April 2024?

A.IRDAI (Product) Regulations, 2019

B.IRDAI (Protection of Policyholders' Interests) Regulations, 2017

C.IRDAI (Expenses of Management) Regulations, 2016

D.IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024

Explanation: The IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 were notified on 22 March 2024 and consolidated several earlier regulations covering the appointed actuary, solvency margins and investments, effective 1 April 2024.

5An insurer's asset share for a block of with-profits policies is best described as the:

A.Accumulation of premiums less expenses, mortality cost and tax, with investment return and miscellaneous profit

B.Statutory reserve held under the valuation regulations

C.Guaranteed maturity value promised at outset

D.Embedded value of the participating fund

Explanation: Asset share is a retrospective accumulation of actual premiums received, rolled up at the actual earned investment return, less actual expenses, cost of cover, tax and adjusted for miscellaneous surplus or shortfalls. It is the benchmark for setting fair maturity payouts on participating contracts.

6Embedded value (EV) of a life insurer is most accurately defined as:

A.The market capitalisation of the company

B.The present value of future shareholder profits from in-force business plus adjusted net worth

C.The total statutory reserves held

D.The sum of all future premiums expected

Explanation: Embedded value equals the adjusted (free) net worth plus the value of in-force business, the latter being the present value of future shareholder profits emerging from existing policies, net of the cost of capital. It excludes the value of future new business.

7Under IRDAI Product Regulations, unit-linked insurance products (ULIPs) sold in India must offer a minimum lock-in period from inception of:

A.1 year

B.3 years

C.5 years

D.10 years

Explanation: IRDAI mandates a five-year lock-in for ULIPs, during which surrenders are not paid out immediately; the discontinuance value moves to a discontinued policy fund and is paid only after the lock-in. This curbs short-term churning and mis-selling.

8For a life insurance policy issued after 1 April 2023 (other than ULIPs), maturity proceeds are exempt under Section 10(10D) of the Income-tax Act only if aggregate annual premium across such policies does not exceed:

A.Rs 1.5 lakh

B.Rs 2.5 lakh

C.Rs 10 lakh

D.Rs 5 lakh

Explanation: Budget 2023 capped the Section 10(10D) exemption for non-ULIP policies issued on or after 1 April 2023: maturity proceeds are tax-exempt only where aggregate annual premium across such policies is up to Rs 5 lakh (and premium does not exceed 10% of sum assured).

9The Indian Accounting Standard for insurance contracts, broadly aligned with IFRS 17, that insurers are transitioning to is:

A.Ind AS 117

B.Ind AS 115

C.Ind AS 109

D.Ind AS 104

Explanation: Ind AS 117 Insurance Contracts is the Indian equivalent of IFRS 17, notified by the MCA in August 2024. It introduces the contractual service margin and measurement models (GMM/PAA/VFA), replacing the interim Ind AS 104 approach for insurers.

10A life insurer prices a 20-year endowment so the present value of expected outgo and required profit exactly equals the present value of premiums. This pricing condition is the:

A.Solvency equation

B.Equation of value

C.Bonus reserve test

D.Resilience equation

Explanation: The equation of value sets the present value of premium income equal to the present value of benefits, expenses and required profit (or, equivalently, drives the net present value to the target). It is the foundational relationship in actuarial pricing.

About the IAI SA2 Exam

IAI Subject SA2 is the specialist-advanced life insurance application paper of the Institute of Actuaries of India. It tests the ability to apply actuarial judgement to complex Indian life insurance problems spanning IRDAI regulation, product pricing, valuation and reserving, embedded value, with-profits and unit-linked business, capital and solvency, distribution, taxation, and risk management.

Assessment

Written specialist-advanced application paper with scenario-based questions, India-jurisdiction specific

Time Limit

Approximately 3 hours 15 minutes

Passing Score

IAI sets the pass mark for each sitting; there is no fixed published percentage

Exam Fee

Set by IAI each diet; see the current IAI fee schedule (Institute of Actuaries of India (IAI))

IAI SA2 Exam Content Outline

20-25%

Indian Regulation and Professional Role

Apply IRDAI product, expenses-of-management and 2024 actuarial-functions regulations, the Appointed Actuary's statutory duties, policyholder-protection rules such as free look and guaranteed surrender values, and participating-fund governance and fairness.

25-30%

Product Design, Pricing and Distribution

Design and price participating, non-participating and unit-linked products using the equation of value and profit testing, set premium loadings and guarantees, and manage distribution channels, persistency and mis-selling risk.

20-25%

Valuation, Reserving and Reporting

Carry out prospective gross-premium and bonus-reserve valuations with prudent margins for adverse deviation, perform liability adequacy testing, and apply Ind AS 117 measurement including the contractual service margin.

25-30%

Embedded Value, Capital, Solvency and Risk

Calculate embedded value and value of new business, maintain the 150% solvency control level, manage with-profits bonus, asset share and the inherited estate, and apply ALM, risk management and Indian taxation rules.

How to Pass the IAI SA2 Exam

What You Need to Know

Passing score: IAI sets the pass mark for each sitting; there is no fixed published percentage
Assessment: Written specialist-advanced application paper with scenario-based questions, India-jurisdiction specific
Time limit: Approximately 3 hours 15 minutes
Exam fee: Set by IAI each diet; see the current IAI fee schedule

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

IAI SA2 Study Tips from Top Performers

1Anchor every answer in the Indian context: cite the relevant IRDAI regulation, the 90/10 par rule, the 150% solvency control level, or the Appointed Actuary's duties rather than generic theory.

2Practise translating principles into management actions, for example using financing reinsurance to relieve new-business strain or de-risking the asset mix when solvency weakens.

3Keep the with-profits toolkit sharp: asset share, reversionary and terminal bonus, smoothing, the inherited estate, and policyholders' reasonable expectations recur constantly in SA2 scenarios.

4Be precise on taxation, including Section 80C, Section 10(10D) thresholds for traditional and ULIP policies, and the tax-exempt status of death benefits.

5Use timed past-paper practice because SA2 rewards structured, applied written answers; multiple-choice drilling builds the knowledge base but cannot replace written practice.

Frequently Asked Questions

What is IAI Subject SA2?

SA2 is the Life Insurance Specialist Advanced (Applications) subject of the Institute of Actuaries of India. It tests the ability to apply actuarial judgement to complex Indian life insurance problems and is the India-jurisdiction counterpart to IFoA SA2.

How long is the IAI SA2 exam?

SA2 is a written application paper of approximately 3 hours 15 minutes. It uses scenario-based questions that require candidates to apply principles to detailed Indian market and regulatory situations rather than recall facts.

What is the passing score for IAI SA2?

The Institute of Actuaries of India sets the pass mark for each examination sitting and does not publish a single fixed percentage. Marks are awarded for sound reasoning and application across the scenario-based questions.

Which topics does SA2 cover?

SA2 covers Indian life insurance regulation (IRDAI), product design and pricing, valuation and reserving, embedded value, with-profits and unit-linked business, capital and solvency, distribution, taxation, and risk management for life offices.

Is this practice set the same format as the real SA2 exam?

No. The real SA2 is a written application paper. This free set provides 100 knowledge-based multiple-choice questions to build the underlying technical knowledge, which complements written-answer practice on past papers.

What recent regulatory changes affect SA2?

Key updates include the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024 effective 1 April 2024, Ind AS 117 for insurance contracts, and the Section 10(10D) and ULIP taxation thresholds introduced in recent Union Budgets.