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Quiz 10
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Q.1
Surplus not distributed (retained earnings) could contribute to
Financial disaster for a company
Financial soundness of a company
Discredit of a company in the eyes of public
Liabilities of a company
Q.2
As per IRDA, all universal life products are known as
ULIPs
Variable insurance products
Both A & B
None of the three
Q.3
IRDA has implemented guidelines on persistency from
1st July, 2011
1st July, 2012
1st July, 2013
1st July, 2014
Q.4
Which of the following statements in respect of riders is incorrect?
Rider means the basic death cover of a life insurance policy
A rider is a provision typically added through an endorsement
Riders refer to supplementary benefits in life insurance policies
Riders help customize individual's preferences
Q.5
Distribution of terminal bonuses is a way out for insurance companies to
'Reward the policyholders for ins.cos' unrealized gains
Achieve equity among different generations of policyholders
Both A & B
Either A or B
Q.6
Unit Linked policy scores over Traditional plan with respect to
Transparent charges structure
Value of the units related to an index of performance
Both premium and sum insured (as a multiple of annual premium) decided by the insured
All of the above
Q.7
If the claim could not be settled for want of proper identification of a payee, the insurer shall pay interest at the rate of
Savings bank account
Bank interest + 2%
5.00%
10%
Q.8
What is the primary purpose of a life insurance product?
Tax rebates
Safe investment avenue
Protection against the loss of economic value of an individual’s productive abilities
Wealth accumulation
Q.9
Who among the following is best advised to purchase a term plan?
An individual who needs money at the end of insurance term
An individual who needs insurance and has a high budget
An individual who needs insurance but has a low budget
An individual who needs an insurance product that gives high returns
Q.10
What does inter-temporal allocation of resources refer to?
Postponing allocation of resources until the time is right
Allocation of resources over time
Temporary allocation of resources
Diversification of resource allocation
Q.11
Which among the following is a limitation of traditional life insurance products?
Yields on these policies is high
Clear and visible method of arriving at surrender value
Well defined cash and savings value component
Rate of return is not easy to ascertain
Q.12
Which of the below statement is true regarding ULIP’s?
Value of the units is determined by a formula fixed in advance
Investment risk is borne by the insurer
ULIP’s are opaque with regards to their term, expenses and savings components
ULIP’s are bundled products
Q.13
In context of insurance, ‘risk retention’ indicates a situation where
Possibility of loss or damage is not there
Loss producing event has no value
Property is covered by insurance
One decides to bear the risk and its effects
Q.14
Occurrence of _________ has to be _________ and not a _________ of the insured person.
Peril, uncertain, creation
An event, certain, creation
Risk, hazardous, profit
An event, random, creation
Q.15
In this method of underwriting, the underwriter gives rating points for all the negative or adverse factors, totals them and decides extra mortality rating. Which method are we talking about?
Biometric rating
Judgmental rating
Clinical rating
Numerical rating
Q.16
Which of the following are true with regards to MWP Act cases?
I: Death claims are settled in favour of nominees.
II: Death claims are settled in favour of trustees.
I is true
II is true
Both I and II are true
Neither I nor II is true
Q.17
Which among the following is true regarding life insurance contracts?
They are verbal contracts not legally enforceable
They are verbal which are legally enforceable
They are contracts between two parties (insurer and insured) as per requirements of Indian Contract Act, 1872
They are similar to wager contracts
Q.18
Which of the below is not a valid consideration for a contract?
Money
Property
Bribe
Jewellery
Q.19
Which of the below can be categorised under wealth accumulation products?
Bank deposits
Life insurance
General insurance
Shares
Q.20
_________ is a rise in the general level of prices of goods and services in an economy over a period of time.
Deflation
Inflation
Stagflation
Hyperinflation
Q.21
Which of the below is not a strategy to maximise discretionary income?
Debt restructuring
Loan transfer
Investment restructuring
Insurance purchase
Q.22
Which act speaks about presumption of death?
Indian Evidence Act
Insurance Act, 1938
IRDA Act, 1999
IRDA Regulations, 2000
Q.23
Which among the following is a wealth accumulation product?
Bank Loans
Shares
Term Insurance Policy
Savings Bank Account
Q.24
Which of the below statement is incorrect with regards to decreasing term assurance?
Death benefit amount decreases with the term of coverage
Premium amount decreases with the term of coverage
Premium remains level throughout the term
Mortgage redemption plans are an example of decreasing term assurance plans
Q.25
Which of the below alteration will be permitted by an insurance company?
Splitting up of the policy into two or more policies
Extension of the premium paying term
Change of the policy from with profit policy to without profit policy
Increase in the sum assured
Q.26
Which of the below is the most appropriate explanation for the fact that young people are charged lesser life insurance premium as compared to old people?
Young people are mostly dependant
Old people can afford to pay more
Mortality is related to age
Mortality is inversely related to age
Q.27
Which of the below is not an advantage of cash value insurance contracts?
Safe and secure investment
Inculcates saving discipline
Lower yields
I.T. advantages
Q.28
Which of the below party is not eligible to enter into a life insurance contract?
Business owner
Minor
House wife
Government employee
Q.29
Find out the proximate cause for death in the following scenario?
Ajay falls off a horse and breaks his back. He lies there in a pool of water and contracts pneumonia. He is admitted to the hospital and dies because of pneumonia.
Pneumonia
Broken back
Falling off a horse
Surgery
Q.30
An individual with an aggressive risk profile is likely to follow wealth _________ investment style.
Consolidation
Gifting
Accumulation
Spending
Q.31
_________ life insurance pays off a policyholder's mortgage in the event of the person's death.
Term
Mortgage
Whole
Endowment
Q.32
Which of the below option is correct with regards to a term insurance plan?
Term insurance plans come with life-long renewability option
All term insurance plans come with a built-in disability rider
Term insurance can be bought as a stand-alone policy as well as a rider with another policy
There is no provision in a term insurance plans to convert it into a whole life insurance plan
Q.33
Savings can be considered as a composite of two decisions. Choose them from the list below.
Risk retention and reduced consumption
Gifting and accumulation
Spending and accumulation
Postponement of consumption and parting with liquidity
Q.34
What is the relation between investment horizon and returns?
Both are not related at all
Greater the investment horizon the larger the returns
Greater the investment horizon the smaller the returns
Greater the investment horizon more tax on the returns
Q.35
Which of the below is an advantage of cash value insurance contracts?
Returns subject to corroding effect of inflation
Low accumulation in earlier years
Lower yields
Secure investment
Q.36
Which element of a valid contract deals with premium?
Offer and acceptance
Consideration
Free consent
Capacity of parties to contract
Q.37
_________ involves pressure applied through criminal means.
Fraud
Undue influence
Coercion
Mistake
Q.38
Which of the below death claim will be treated as an early death claim?
If the insured dies within three years of policy duration
If the insured dies within five years of policy duration
If the insured dies within seven years of policy duration
If the insured dies within ten years of policy duration
Q.39
Given below are some events that will trigger survival claims. Identify which of the below statement is incorrect?
Claim paid on maturity of a term insurance policy
An instalment payable upon reaching the milestone under a money-back policy
Claim paid for critical illnesses covered under the policy as a rider benefit
Surrender value paid on surrender of an endowment policy by the policyholder
Q.40
Which among the following can be categorised under transactional products?
Bank deposits
Life insurance
Shares
Bonds
Q.41
Which among the following can be categorised under contingency products?
Bank deposits
Life insurance
Shares
Bonds
Q.42
Shankar bought a 10 year Unit Linked Insurance Plan. If he dies before the maturity of the policy which of the below will be paid?
Lower of sum assured or fund value
Lower of sum assured or fund value
Premiums paid will be returned with 2% higher interest rate as compared to a bank’s savings deposit
Surrender value
Q.43
“A clause precluding death due to pregnancy for a lady who is expecting at the time of writing the contract” will be included in which section of a standard policy document?
Policy schedule
General provisions
Standard provisions
Specific policy provisions
Q.44
Which of the below statement is false with regards to nomination?
Policy Numbermination is not cancelled if the policy is assigned to the insurer in return for a loan
Nomination can be done at the time of policy purchase or subsequently
Nomination can be changed by making an endorsement in the policy
A nominee has full rights on the whole of the claim
Q.45
When is a policy deemed to be lapsed?
If the premiums are not paid on due date
If the premiums are not paid before the due date
If the premium has not been paid even during days of grace
If the policy is surrendered
Q.46
Applicant shall complete _________ hours training to become an insurance agent.
50
100
30
25
Q.47
Identify the statement which is not correct. Insurance agent should _________.
Indicate the scale of commission if asked by the customer
Share the commission by way of rebate
Disclose his licence on demand
Indicate the premium to be charged
Q.48
Which of the below insurance proposal is not likely to qualify under non-medical underwriting?
Savita, aged 26 years, working in an IT company as a software engineer
Mahesh, aged 50 years, working in a coal mine
Satish, aged 28 years, working in a bank and has applied for an insurance cover of Rs. 1 crore
Pravin, aged 30 years, working in a departmental store and has applied for an endowment insurance plan for a tenure of 10 years
Q.49
Sheena is suffering from acute diabetes. She has applied for an insurance plan. In this case the underwriter is most likely to use _________ for underwriting. Choose the most appropriate option.
Judgment method
Numerical method
Any of the above method since an illness like diabetes does not play a major role in the underwriting process
Neither of the above method as diabetes cases are rejected outright
Q.50
Which of the following is not an underwriting decision?
Risk acceptance at standard rates
Declinature of risk
Postponement of risk
Claim rejection
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