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100+ Free IAI SA2 Practice Questions

IAI Subject SA2 Life Insurance Specialist Advanced practice questions are available now; exam metadata is being verified.

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The 'profit margin' on income tax for a participating life fund in India is affected by the fact that policyholder and shareholder profits may be:

A
B
C
D
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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 Practice Questions

Verified exam format metadata for IAI Subject SA2 Life Insurance Specialist Advanced is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.