Archive / Investment Adviser (Level 2) / Non-Life Insurance Products
nism-series-xb-risk-profile-single-earner-multiple-loans-goals[ INVESTMENT ADVISER (LEVEL 2) ]
In Module 12 Practice Question 4: 'Mr. C is a 45-year-old single earning member of his family with a good income. He is saving for multiple financial goals, some of which are due for funding now. He has an active home loan and a car loan that he is servicing.' How should Mr. C's risk profile be best categorized based on his circumstances?
[ A ]Aggressive
[ B ]Conservative
[ C ]Moderate[ CORRECT ]
[ D ]Liquidity seeker
Takeaway
Given his good income balanced against sole-earner status, active loans, and immediate goal funding needs, Mr. C's risk profile is best categorized as Moderate, so option C is correct.
Derivation
Mr. C's strong current income supports meaningful risk capacity, but three offsetting factors temper it: he is the sole earning member (no income diversification if he stops working), he carries active home and car loan EMIs (fixed obligations that must be serviced regardless of market conditions), and some financial goals are due for funding imminently (reducing tolerance for volatility on that portion of the portfolio). None of these factors alone would push him to Conservative, but together they rule out an Aggressive profile. This tests the practical risk-profiling exercise of weighing income capacity against concurrent liability and liquidity pressures, rather than looking at income in isolation.
Why the others fail
A — Aggressive
An aggressive profile is unsuitable given his sole-earner dependency, ongoing loan EMI commitments, and the need to fund some goals imminently, all of which reduce risk tolerance.
B — Conservative
A conservative profile is unnecessarily restrictive given his strong current income and a reasonably long remaining working and investment horizon.
D — Liquidity seeker
'Liquidity seeker' describes a short-term operational cash-management state for a specific goal, not a comprehensive overall risk profile category.
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