MCQ Ic 01 Aiibf 350 WM PDF - 211125 - 150804

AIIBF MCQs for I.I.
I Licentiate / Associate Exams : Whats App : 79996-88188

AURUM’S 7 MCQ SET for I.I.I LICENTIATE Exam IC 01
AURUM INSTITUTE OF INSURANCE, BANKING & FINANCE (Indore)

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SET 1 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE
1. ___________ is known as the cause of Loss.

a) Accident
b) Peril
c) Hazard
d) Risk
e) None of the above.
2. What is the co-relation between Risk and Probability ?

a) Higher the Probability, Lower is the Risk
b) Higher the Probability, Higher is the Risk
3. Changes in the price level, consumer tastes, fashions, income and output, technology and
political disturbances are all examples of :
a) Social risks
b) Dynamic risks
c) Political risks
d) Socio economical risks
e) None of the above
4. Among the following examples of risk reduction for a peril, mark the Odd one out :
a) Smoke detectors
b) Water sprinklers
c) Helmets
d) Alarm systems
e) Emergency exits
5. Ajay is a chemical trader and applies for a Fire insurance policy of Rs.5 lakhs for goods stored in his
godown. Its worth mentioning that Ajay has installed Fire fighting equipments in the godown.
The insurance company conducted a pre-inspection survey and calculated the Risk Mitigation factor at 20%.
Ajay paid the premium of Rs.5000 and the insurance company issued the policy.
Calclulate the PML in case of Total Loss claim in this policy ?
A) 1,00,000
B) 5,20,000
C) 4,00,000
D) 4,80,000
AIIBF MCQs for I.I.I Licentiate / Associate Exams : Whats App : 79996-88188
E) 5,05,000
6. Elimination of the possible hazards is a way of _______________ the risks.

A) Reducing
B) Avoiding
C) Retaining
D) Transfer
7. Which of the following comes under risk transfer techniques :

A) Buying insurance policies
B) Using derivatives as a hedge against financial risks
C) Outsourcing of business transactions
D) Using indemnity agreements
E) All of the above
8. Insurance primarily takes care of :

a) protection of life & health
b) Protects assets
c) Unexpected events
d) Financial coverage
e) Economic & social coverage
9. Insurance works on the principle of :

a) Sharing
b) Indemnity
c) Law of large numbers
d) Probabilities
e) All of the above
10. Which one is marked as the Birth date of L.I.C ?

A) 31ST Sept. 1966
B) 1st Oct.. 1965
C) 31ST Sept. 1966
D) 1st Sept. 1956.
E) 1st Oct. 1959
11. Insurance company collects the _______ from people exposed to risk and puts the money in
_________ .
a) Interest ; Pension Fund
b) Installment ; Security Fund
c) Premium ; Risk Pool
d) Installment ; Risk Pool
e) Premium ; Investment Fund
12. Which of the following may be termed as a sub-standard risk:
A) Proposer having Smoking habit
B) Proposer is Diabetic and Overweight
C) Proposer suffering from Stage 4 Cancer
D) A & b
E) A, b and c
13. In some countries outside India, General insurance is also called as :

A) Non Life insurance
B) Miscellaneous insurance
C) Property & Casualty insurance
D) Property & Health Insurance
E) Fire, Marine & Misc. Insurance
14. Which one of the following does not belong to the main products of life insurance ?
A) Endowment plan
B) Personal accident insurance
C) Term plan
D) Whole life plan
E) Life insurance
15. When assessing risks, the risk manager should have a ___________ approach.
A) Logical
B) Rational
C) Holistic
D) Empirical
E) Incidental
16. The purpose of an insurance company is to :

A) Bring people together who share similar risks
B) Collect premium from these people
C) Creation of a fund from the premium collected
D) Pay claims in event of loss
E) All of the above
17. In managing the common funds on behalf of the policyholders, the insurer acts as a :
A) Trustee
B) Guardian
C) Fund Holder
D) Company
E) Reserve fund
18. Who was the national Reinsurer in India until the year 2016 :
A) L.I.C of India Ltd.
B) G.I.C of India
C) G.I.C of India Ltd.
D) Swiss Re
E) Munich Re
19. Select the odd one out :

a) The Oriental Insurance Co. Ltd.
b) Life Insurance Corporation of India.
c) National Insurance Co. Ltd.
d) The New India Assurance Co. Ltd.
e) United India Insurance Co. Ltd.
20. The insurance agents have to obtain separate licences for working in Life & Non-Life insurance
companies ?
A) True
B) False
21. Brokers are allowed to work for for Life and General insurance companies and also with
Re-insueres at the same time.
A) True.
B) False
22. The examination for Surveyors as prescribed by IRDA in India are conducted by :
A) General Insurance companies
B) Indian Institute of Surveyors
C) Engineer’s Council
D) IRDA
E) Insurance Institute of India
23. IRDA is a Corporate body and the Chairman & other members are appointed by the :
A) Govt of India
B) provisions of Companies Act
C) Insurance Councils
D) Insurance Ombudsman
E) provisions of Insurance Act
24. Which is the topmost & premier institute for the education in insurance sector in India ?
A) Federation of Insurance Institutes
B) Insurance Institute of India
C) College of Insurance
D) National Insurance Academy
E) Institute of Insurance & Risk Management
25. A customer is a person who buys goods or services that a business offers. Who is the customer
in insurance business ?
A) Proposer
B) Client
C) Prospect
D) Insured
E) Consumer
26. The major products bought by individual customers in Indian insurance market are ?
A) Motor insurance
B) Health insurance
C) Personal Accident plans
D) Property insurance
E) All of the above.
27. The selling of general insurance is considered easier than that of life insurance because :
A) The customer can see the necessity to buy
B) Motor insurance is required by law
C) Insurance of mortgaged goods is required by banks
D) In trade & commercial agreements, insurance is a pre-requisite
E) All of the above
28. Which of the following constitutes the Ethics in Business ?

A) Accountability & Honesty
B) Corporate Governance
C) Only a
D) Only b
E) Both a and b
29. Insurance is a contract between two parties. The 2 parties are :

A) Insurance company & Policyholder
B) Proposer & Insured
C) Two Insurance company
D) Policyholder & Insured
E) Insurance company & Proposer
30. As per IRDA regulations, decisions on the Proposal must be conveyed to the Proposer within :
A) 10 days
B) 15 days
C) 7 days
D) 45 days
E) 30 days
31. The principle of insurable interest is defined by the :
A) Insurance companies
B) Court of laws
C) Insurance Act, 1938
D) IRDA
E) Policy conditions
32. The transfer of policies from one person to another with change of ownership is called :
A) Novation
B) Alteration
C) Name Transfer
D) Title Transfer
E) Policy Transfer
33. The deduction for under insurance is done to make sure the principle of indemnity works. Such
type of deduction is also called :
A) Condition of Average
B) Condition of Deduction
C) Under Insurance Deduction
D) Low Ratio Deduction
34. In India, insurers have an agreement with each other that they will not counter sue. This is called
as :
A) Knock for Knock agreement
B) Subrogation agreement
C) Indemnity agreement
D) Contribution agreement
35. The material fact is relevant for assessing the risk and the premium. Such facts affects the
decision of the :
A) Insurance company
B) Insured
C) Underwriter
D) Claims department
E) All of the above
36. Proximate cause is known to be the _________ cause.

A) Most risky
B) Biggest
C) Closest
D) Immediate
E) Nearest
37. The two basic elements of Life insurance plans are ___________ and __________ .
Choose the two most appropriate options.
A) Death cover and Maturity benefit
B) Risk cover and Lumpsum payment
C) Savings and Risk cover
D) Risk cover and Investment
E) Death benefit and Maturity amount
38. Whole Life plans in the U.S and Canada are popularly known as :
A) Permanent plans
B) Full Life plans
C) 100 Years plans
D) Life Long plans
E) Entire Life plans
39. The insurance plans which provide the combination of insurance protection and investments are
called :
A) Package plans
B) Joint Benefit plans
C) ULIPs
D) Joint Annuities
E) Investment plans
40. The persons looking for moderate gains with moderate risks should choose :
A) Money Market fund
B) Equity fund
C) Capital fund
D) Balanced fund
E) Debt fund
41. The risk of living too long is covered by :

A) Term Insurance
B) Whole Life plans
C) Joint life policy
D) Annuity
E) ULIP Plans
42. The risk cover in a group policy is given to :

A) The participating members
B) Members elected by voting
C) Members as per their rank
D) Members as per their income
E) Each and every member
43. The policies in which the perils covered are listed are known as :
A) Fire policies
B) Named peril policies
C) Marine Cargo policies
D) Aviation insurance
E) Marine Hull policies
44. Marine Hull policies also provide the coverage under a single __________ basis.
A) Trip
B) Sea Fare
C) Cargo
D) Transit
E) Voyage
45. In personal accident policies, there is no need for assessment of risk, except of the :
A) Age
B) Occupation
C) Health
D) Family history
E) Personal habits
46. Errors and Omissions policies cover the financial losses due to negligent actions of :
A) Doctors
B) Chartered Accountants
C) Engineers
D) Architects & Planners
E) All of the above
47. Which one of the following insurance is mostly reinsured by the insurer :
A) Fidelity Guarantee
B) Overseas Medical insurance
C) Industrial All risk policy
D) Aviation insurance
E) Engineering insurance
48. The insurance receipt which also contains the policy details is known as _____________ .
A) Policy Receipt
B) First Premium Receipt
C) Underwriting Receipt
D) Renewal Premium Receipt
49. The policy providing full coverage which includes both “Own Damage” premium and “Third Party
Liability” premium is called __________ policy .
A) Complete
B) Combined
C) Comprehensive
D) Composite
50. The maximum liability of an insurer under a life insurance policy is shown by the :
A) Sum Assured
B) Maturity amount
C) Surrender value
D) Foreclosure amount
AURUM’S 7 SET of MCQ’s for I.I.I LICENTIATE Exam IC 01
1. Which of the following is not an example of a Peril :

a) Fire
b) Theft
c) Car
d) Lightning
e) Flood
2. Insurance covers only those _____ where the possibility of occurrence is ______
a) Perils , Certain
b) Risks , Uncertain
c) Perils , Uncertain
d) Hazards , Certain
e) Risks , Certain
3. Risk is known as the chance of loss. Choose the risk in which there is a chance of loss as well as a
chance of gain.
a) Business risk
b) Speculative risk
c) Financial risk
d) Dynamic risk
e) Important risk
4. Which one of the following Hazard is the most difficult to assess and also needs past history of the
proposer :
a) Moral Hazard
b) Physical Hazard
c) Morale Hazard
d) Moral & Morale Hazard
e) Morale & Physical Hazard.
5. The formula of Maximum Probable Loss (MPL) is the same as the :

A) Total Loss
B) Actual Total Loss
C) Constructive Total Loss
D) Total Actual Loss
6. Buying an insurance policy is an example of ______________ of risk.
A) Prevention
B) Transfer
C) Reduction
D) Controlling
E) Retention
7. People need life insurance to take care of which of the following obligations ?
a) To cover the risk of dying early
b) Income needs of the family
c) Children’s education and marriage
d) To cover the risk of living too long
e) All of the above
8. The first written insurance policy was in __________ with the code of King Hammurabi and
protected the traders against loss of ___________ .
a) Babylon ; Cargo
b) London ; Marine
c) China ; Cargo
d) Llyod’s ; Coffee
9. When was the General Insurance Corporation of India incorporated?

a) 1971
b) 1972
c) 1973
d) 1993
10. Which of the following is not included in the concept of Pooling :

A) People of similar risk are brought together
B) Insurance company acts as an Intermediary
C) Premiums are calculated on individual basis as per Risk profile of different people
D) Mutual consent among members to share the losses of unfortunate persons
E) Compensation tries to put the affected person in the same place as before the loss
11. Insurance companies derive their premiums on the basis of there _______ experiences.
A) Present
B) Past
C) Future
D) Overall
E) Industry
12. Which of the insurance policies are mostly issued for one year and are renewable :
A) Life
B) Health
C) Motor
D) General
E) Marine
13. Which of the statements is not correct about insurance ?

A) Economy is directly linked to General insurance business.
B) Trade & industry gets some stability by having insurance
C) Business owners can’t concentrate on their business due to high cost of insurance
D) Business owners know that insurance will compensate their losses in case of losses
E) In the absence of insurance, businesses will be exposed to risk of heavy losses due to any natural
calamity
14. ______________ is unavoidable in life.

A) Accident
B) Death
C) Risk
D) Life Insurance
E) General insurance
15. Choose the correct option keeping in mind, the Licence to be obtained by an insurer for doing
business in India :
A) An Insurer can conduct only life insurance business
B) An Insurer cannot conduct both life & general insurance business
C) An Insurer can conduct only general insurance business
D) An Insurer can conduct life, general and health insurance business.
16. The process of risk assessment, to determine the exposure of the group and the risk premium is
termed as :
A) Underwriting
B) Risk measurement
C) Premium writing
D) Risk writing
E) Group Underwriting
17. Who is the worlds largest Reinsurance company :

A) G.I.C of India
B) Swiss Re
C) Munich Re
D) Llloyd’s of London
E) Hannover Re
18. The Insurance Act, 1938 was amended in _________ to provide registration of ________
Insurers in India.
A) 1999, private
B) 1990, public
C) 1991, health
D) 1999, public
E) 1991, non-life
19. The insurance agents after obtaining both Life & Non-Life Licences from IRDA can work for any
insurers ?
A) True
B) False
20. How much is the minimum prescribed investment capital for a Re-insurance Broker in India ?
A) 50 Lacs
B) 100 Lacs
C) 250 Lacs
D) 2 Crores
E) 5 Crores
21. Licence for insurance Surveyor’s is valid for how many years :
A) 1
B) 3
C) 5
D) 2
E) Life Time
22. Insurance councils are constituted under the provisions of :

A) IRDA Act, 1999
B) Insurance Act, 1938
C) Govt of India
D) Consortium of Insurance companies
E) Insurance Ombudsman
23. Which is the training wing of the Insurance Institute of India ?

A) Federation of Insurance Institutes, Mumbai
B) Insurance Institute of India, Mumbai
C) College of Insurance, Mumbai
D) National Insurance Academy, Pune
E) Institute of Insurance & Risk Management, Hyderabad
24. In modern marketing the most important element of marketing is _________________ .
A) Division of markets
B) Interaction of customers
C) Size of markets
D) Segmentation
E) Direct marketing
25. The corporate insurance market in countries like U.S, Australia and Europe is controlled by the
insurance ____________ .
A) Agents
B) Brokers
C) Corporate Agents
D) Re-insurers
E) Web Aggregates
26. The real value of Life insurance is experienced at the time of :

A) Maturity
B) Accident
C) Claim
D) Emergency
E) Death
27. Which among the following is not considered unethical in insurance business ?
A) Telling exorbitant benefits under the plan
B) Hiding true disclosures of the product
C) Offering a rebate in return of buying a policy
D) Obtaining complete information about the prospective customer
E) Tempting the client to close existing policy to sell a new one
28. Which among the following are the essential features of a valid contract ?
A) Offer and Acceptance
B) Consideration
C) Legality of object
D) Capacity to Contract
E) All of the above
29. In insurance the policy document is the evidence of :

A) Contract
B) Risk
C) Sum Assured
D) Legal Offer
E) Insurance coverage
30. Gambling has no insurable interest involved but insurance does have. State whether :
A) True
B) False
31. The principle of indemnity ensures that :

A) Insurance cannot be used to make a profit
B) Insurance should not be taken by high risk people
C) Insurance cannot be taken by Politicians
D) Insurance can be used to make profits
E) None of the above.
32. To prevent insured from claiming small & ordinary losses, some deductible is enforced in general
insurance policies. This deductible is also called :
A) Over Clause
B) Excess Clause
C) High Ratio Clause
D) Low Claim Clause
E) Ordinary Clause
33. In general, the principle of Contribution is also termed as :

A) Half insurance
B) Double insurance
C) Partial insurance
D) Joint insurance
34. Insurance contracts form a legal relationship and are based on :

A) Advice
B) Trust
C) Mutual consent
D) Need of Proposer
E) Market demand
35. The need for identifying the “Proximate Cause” arises in cases where there are :
A) More than one events
B) There is a chain of events
C) Where the first cause was an insured peril & it lead to uninterrupted chain of events
D) If the identified immediate cause is an insured peril & is responsible for the loss
E) All of the above
36. Insurance is bought by individuals to fulfill one of their basic need of :
A) Medical expenses
B) Income
C) Saving
D) Protection
E) Child education
37. The insurance plan which is often used by financial planners for Estate planning is :
A) Pure Endowment plans
B) Endowment Assurance plans
C) Whole Life plans
D) Convertible plans
E) Endowment plans
38. Which among the following form a part of the insurance premiums of ULIP plans ?
A) Expenses
B) Mortality portion
C) Investment portion
D) All of the above
39. The Money Market fund is also termed as :

A) Short term fund
B) Liquid fund
C) Maximiser fund
D) Gilt fund
E) Value fund
40. The annuities work in just the reverse way of :

A) Investment
B) Insurance
C) Convertible plans
D) Dividends
E) Unit Linked Insurance plans
41. The Micro Insurance plans were allowed by IRDA in the year :
A) 2005
B) 2007
C) 2006
D) 2015
E) 2010
42. In general insurance policies, the following are mentioned separately for avoiding any disputes in
future ?
A) Exclusions
B) Riders
C) Warranties
D) Nominations
E) Assignments
43. The international maritime clauses in Marine Cargo and Hull insurance are formulated by :
A) Institute of London Underwriters
B) Lloyd’s of London
C) P & I Clubs of London
D) Insurance Institute of London
E) London Underwriters Association
44. The cashless treatments given by Health insurance companies to customers is :

A) An obligation
B) A facility
C) An emergency service.
D) Both A and B
E) Both B and C
45. Which of the following risk is excluded in a Liability policy ?

A) Wrong advice
B) Faulty designing
C) Negligence during a surgery
D) Willful non-compliance, Fines & penalties
E) Industrial accidents
46. Industrial All risks, Oil and Gas, Satellite and Aviation insurances are all :
A) Specialized policies
B) Package plans
C) Reinsured
D) Catastrophic Risks
E) All of the above
47. What are the “days of grace” granted by the insurer for paying the premium of a policy issued
under the Monthly mode as per IRDA rules ?
A) 15 days
B) 30 days
C) 10 days
D) 45 days
E) 7 days
48. Among the below mentioned coverages, which insurance is compulsory by law specially in case
of Motor policies ?
A) Own Damage
B) Liability only
C) Excees of Loss
D) Comprehensive
E) Composite
49. The amount of money paid by Proposer in exchange for the insurance is called :
A) Consideration
B) Premium
C) Tabular Premium
D) All of the above
50. When the insurer has no obligation or liability to pay a disputed claim, even though insurer pays
a lump sump payment, this is called :
A) Honorary payments
B) Ex-gratia payments
C) Moratorium payments
D) Conditional payments
1. ___________ is known as the cause of loss / damage; and ___________ is known as the chance of
loss / damage.
a) Peril ; Hazard
b) Risk ; Peril
c) Hazard ; Risk
d) Peril ; Risk
e) Risk ; Speculation
2. Which of the following is True :

a) Insurance is taken to prevent the occurrence of the peril
b) Insurance is taken to prevent the occurrence of the resultant loss due to a peril
c) Insurance is taken to gain by way of compensation in case of a loss / damage
d) Insurance is taken to reduce the financial loss of the owner or beneficiary of the asset in
case of a loss / damage
e) All of the above
3. Among the following examples of risks, mark the Odd one out :
a) Horse Racing
b) Gambling and betting
c) Investing in equity shares in stock market
d) Robbery
e) Lottery
4. The purpose of risk management is :

a) to identify risks
b) To eliminate risks
c) To reduce risks
d) All of the above
5. Calculate the Total Loss and the Risk exposure of Praveen in the below case :
Praveen intents to buy investment bonds of 5 years issued by ABC Corp. of Rs.10000.
The default risk of the issuer is pegged at 1.35 %.
ABC Corp. applies for bankruptcy under the Insolvency Act after 2 years of issuing the investment bonds.
A) Rs.1350 and Rs.10000
B) Rs.10000 and Rs.135
C) Rs. 10135 and NIL
D) Rs.135 and Rs.10000
E) Rs.10000 and NIL
6. Provision of an additional engine in an aircraft, maintaining inventories of essential machine

spares by a factory, creation of forex reserves and taking back-up of data files are examples of :
A) Contingency Management
B) Business Management
C) Risk Management
D) Data Management
E) Financial Management
7. While choosing the alternatives for Risk Management, which considerations are equally important
:
A) Ethical
B) Financial & Technical
C) Only B
D) Only A
E) Both A and B
8. Which of the following Risks are associated with your Car ?

A) Risk of damage to car due to accident
B) Risk of theft of car
C) Risk of car accident & injury to driver
D) Risk of third party liability due to car running over pedestrian
E) All of the above
9. Traders in London used to gather at __________________ and share losses of goods due to
pirates and ship sinking.
A) Coffee Shop
B) Lloyd’s Bakery
C) Llyod’s Coffee house
D) Lloyd’s House
E) London house
10. Who among the following is the regulator of Insurance business in India ?
A) SEBI
B) RBI
C) IRDAI
D) Govt. Of India
E) IRDA
11. In insurance mechanism, the premium paid by each member is __________ to the risk he is
exposed to :
a) Equal
b) Lesser
c) Greater
d) Proportionate
e) Common
12. To be insurable, the loss must be :

A) Likely to occur by chance
B) Identifiable within time
C) Quantifiable in money terms
D) Can be predictable reasonably well
E) All of the above
13. Choose the most appropriate option :

Mediclaim policies fall under the category of which class of Insurance :
A) Health
B) Life
C) General
D) Miscellaneous
E) Fall under both Health & Life
14. What are the advantages of insurance :

A) Insurance introduces security
B) It Increases business efficiency
C) It makes savings possible
D) It facilitates better health care
E) All of the above
15. What of the below listed possible risks are not associated with buying a house :
A) Damage due to fire
B) Auction of the house due to owners business liability
C) Damage due to Earthquake
D) Unable to pay house loan EMI in case of accident or death of owner
E) Risk of theft or burglary
16. Insurance works on the principle of :

A) Sharing
B) Indemnity
C) Law of large numbers
D) Probabilities
E) All of the above
17. The process of transfer of risk from one insurer to another insurer is termed as :
A) Transfer insurance
B) Risk transfer
C) Reinsurance
D) Risk retention
E) Risk reduction
18. Which of the insurance directly impacts the industry and runs parallel to economic growth ?
A) Life Insurance
B) General insurance
C) Health insurance
D) Marine Insurance
E) None of the above
19. What is the current limit of FDI, allowed by IRDA for private insurance companies ?
A) 26 %
B) 38 %
C) 45 %
D) 49 %
E) 51 %
20. The minimum education criteria prescribed by IRDA for Urban Agents Licence is :
A) Class 12th
B) Class 10th
C) Graduation
D) Class 5th
E) None of the above.
21. Which among the following are not regulated by IRDAI ?

A) Insurance Brokers
B) Agents
C) Corporate Agents
D) C.A.S.A Agents
E) T.P.A
22. The medical examiners are important intermediaries used in :

A) Life insurance
B) Health Insurance
C) Cattle Insurance
D) General Insurance
E) All of the above
23. The Tariff Advisory Committee was constituted under the Insurance Act particularly for the :
A) General Insurers
B) Life Insurers
C) Health Insurers
D) Motor Insurers
E) All of the above
24. Which is the only institute in India conducting exams for the Actuaries ?
A) Actuarial Society of India
B) Institute of Actuaries of India
C) Insurance Institute of India
D) College of Insurance
E) Institute of Insurance & Risk Management
25. The person to whom the insurance agent has approached and who is planning to buy an
insurance is called ?
A) Customer
B) Prospect
C) Future customer
D) Client
E) Buyer
26. Small shops, offices, restaurants & cafes, hotels and small manufacturers come under which
segment of Insured ?
A) Retail -- SME
B) SME
C) Retail -- Individual
D) Small Retailers
E) Small Enterprises
27. In which of the insurance businesses, the customer who buy’s the policy may not be the person
who receives the claim :
A) Life insurance
B) Marine Insurance
C) Health Insurance
D) Both A & B
E) Both A & C
28. To counter the problem of unethical or mis-selling in insurance, IRDA is giving a facility of :
A) Return of the policy within 1 month
B) Free look period of 15 days
C) Return of premium in 1 month
D) Free cancellation of policy in 15 days
29. Life insurance is also known as a :
A) Value Contract
B) Speculative contract
C) Contract of Indemnity
D) Only c
E) Both a and c.
30. In insurance contracts, the consideration which makes the contract valid is called :
A) Bonus
B) Premium
C) Sum Assured
D) Installment
E) Investment
31. Debtors and Creditors have insurable interest on the lives of each other upto the extent of :
A) Life value of the Debtor
B) Life value of the Creditor
C) The debt given
D) Unlimited
32. The principle of indemnity does not applies on which class of insurance ?
A) Life
B) General
C) Marine
D) Agriculture
E) Health
33. In case of insurance of very high valued items or properties, the valuation of sum assured is done
by mutual consent. Such policies are called :
A) High value
B) Agreed Value
C) Mutual Value
D) Consent Value
34. Match the following Types of Insurance with the most concerned Material Facts :
A) Fire insurance ; 1. Details of vehicle
B) Health insurance ; 2. Use & age of building
C) Marine insurance ; 3. Age & personal habits
D) Motor insurance ; 4. Description of goods
E) Life insurance ; 5. Medical history of own and of family
35. Which element is not a part in contract of insurance ?
A) Utmost good faith
B) Misrepresentation
C) Non-disclosure
D) Security
E) Insurable interest
36. Which of the following are the factors affecting an individuals protection need :
A) Age
B) Income
C) Dependents
D) Assets & Liabilities
E) All of the above
37. The insurance plans in which a lump sump benefit is being paid in fixed intervals before the
maturity benefit are known as :
A) Return of S.A Plans
B) Money Back plans
C) Money Paid plans
D) Return of Investment plans
E) Money interval plans
38. The part of premium of ULIP plans go towards meeting some expenses which are also called :
A) Policy expenses
B) Statutory charges
C) Investment expenses
D) Policy Allocation Charges
E) Premium expenses
39. The maturity value in case of ULIP Plans is called as :

A) Asset value
B) Fund value
C) Net Investment Value
D) Growth value
E) Net Asset Value
40. In immediate annuity, the annuitant starts receiving the benefit soon after the :
A) Payment by the Annuitant
B) After a specified period
C) After the deferment period
D) Commencement of the policy
41. The latest trend seen in the distribution of ULIPs and Term plans is through :
A) Internet
B) Corporate Agents
C) Micro Insurance
D) Web Agents
42. A comprehensive Fire policy may provide cover for :

A) Fire
B) Explosions
C) Loss of Profits
D) Consequential loss of profits
E) All of the above
43. What is the largest class of miscellaneous insurance in India ?

A) Fire
B) Marine
C) Motor
D) Health.
44. The Health insurance policy in which the family members share the sum insured is called :
A) Family plan
B) Family Floater policy
C) Floater Sum Assured
D) Joint life plans
E) Group Health plans
45. The insurance policy which covers the risk related to employee dishonesty and fraud is called :
A) Goodwill Guarantee policy
B) Fidelity Guarantee policy
C) Employee All Risk policy
D) Fraud insurance
E) Office Risk policy
46. Loss of credit card, loss of pan card, etc comes under the :
A) Baggage insurance
B) Travel insurance
C) Identity Theft cover
D) Event insurance
E) Business loss policy
47. The risk cover ceases when the premium is not paid even after the Grace Period. This condition is
known as __________ .
A) Default
B) Non-payment
C) Forefeiture
D) Lapsation
E) Termination
48. Which part of the standard Motor policy has to be kept in the vehicle for compliance of The Motor
Vehicle Act, 1988 ?
A) Certificate of Insurance
B) Own Damage policy
C) Premium Receipt
D) Third Party policy
49. Suicide Clause in a life insurance policy is a type of ___________ .

Choose the most appropriate answer.
A) Condition
B) Exclusion
C) Warranty
D) Consideration
E) Endorsement
50. The part of Gross Direct business which is Reinsured is known as ________ business.
A) Ceded
B) Transfered
C) Treaty
D) Retro
E) Retention
1. Risks are the likelihood of loss or damage resulting from the occurrences of :
a) Hazards
b) Perils
c) Accidents
d) Both a and b
e) Both a & c
2. _________ risks are more predictable and _________ risks are considered as the most insurable
risks :
a) Static and Pure
b) Dynamic and Static
c) Fundamental and Important
d) Pure and Dynamic
e) Catastrophic and Financial
3. Statement 1 : Catastrophic risks are big enough to cause bankruptcy of the owner or even the
insurer of assets.
Statement 2 : Fundamental risks are those that affect a lot of people together.
In the light of above two statements, choose among the examples of these two risks in the correct
sequence :
a) Fire & Theft in a house
b) Nuclear War & Train Accident
c) Flood & Bike accident of Sunil
d) Train accident & Job loss of Sunil
e) Bankruptcy of Sunil & Earthquake
4. The actual loss includes the cost of :

A) Repair
B) Replacement or Reinstatement
C) The Consequential losses
D) Only A & B
E) All of the above
5. The first and foremost step of Risk Management process is:
A) To insure risk
B) To control risk
C) To prevent risk
D) To reduce risk
6. Listed below are some of the reasons for financial risks. Mark the odd one out :
A) Fluctuations in the stock market
B) Exchange rate fluctuations
C) Political disturbances
D) Mental agony and loss of reputation
E) Inefficient capital structure of a business
7. Risk Management as a subject of study evolved formally as a function of :

A) Business enterprise
B) Debt collectors
C) Financial lending
D) Investment organisation
8. Match the following unexpected situations associated with the types of Risks / Assets :
a) Loss of income due to untimely death 1. Business Risk
b) Legal liability due to third party injury on road 2. Ship
c) Damage to machinery and theft of factory stock 3. Health Risk
d) Loss of income due to illness 4. Car
e) Cancellation of export order due to delays 5. Job Risk
9. When was the Oriental Life Insurance Company established ?

a) 1818
b) 1834
c) 1907
d) 1938
e) 1829
10. Full name of IRDAI and where its office is situated ?

A) Insurance Rules & Development Authority of India; Chennai
B) Insurance Regulatory & Development Authority of India; Hyderabad
C) Insurance Regulation & Development Authority of India; Bangalore
D) Insurance Regulatory & Developmental Authority (India); Mumbai
11. In insurance, Risk is measured in terms of __________ and Premiums are worked out on the
basis of ______________ .
a) Factors; Risk
b) Ratings; Percentage
c) Percentage, Probabilities
d) Ratings; Investments
e) Probabilities; Sum Assured
12. Life insurance is related with the protection and compensation of which assets :
A) Personal Property
B) Human lives
C) Pension funds
D) A & B
E) B & C
13. Which of the following categories of insurance falls under General insurance :
A) Fire
B) Marine
C) Miscellaneous
D) Both A & B
E) A, B & C
14. When was the Export Credit Guarantee Corporation of India established ?
A) 1938
B) 1957
C) 1973
D) 1971
E) 1975
15. If an individual thinks to reduce the risk, he should put the plans and strategies, _________ the
occurrence of an incident.
A) after
B) before
C) at
D) during
E) on
16. An insurer can do business in two categories on the basis of only one Licence in case of :
A) Life insurance
B) Health insurance
C) Micro insurance
D) General insurance
E) Miscellaneous insurance
17. Reinsurance can be exercised by an insurance company in :
A) Full
B) Part
C) Both Full & Part
D) Excess
E) Surplus
18. As per the Insurance Act, what is the maximum limit placed on insurance companies with regard
to their investments in any one particular company ?
A) 20%
B) 40%
C) 15%
D) 25%
E) 30%
19. Which among the following are owned by Govt. Of India and are established by Acts of
Parliaments ?
A) Life Insurance Corporation of India.
B) General Insurance Corporation (GIC) of India.
C) National Insurance Co. Ltd.
D) Only A & B
E) All of the above
20. The agents get earnings in the form of _______ and these are regulated by _______ .
A) Salary ; Insurance Companies
B) Salary ; Development Officers
C) Commission ; Insurance Companies
D) Bonus ; IRDA
E) Commission ; IRDA
21. The latest changes in regulations for insurance brokers was done by IRDA in the year :
A) 2013
B) 2015
C) 2018
D) 2016
22. The primary role of any medical examiner is to examine and certify the ____________
and the insurability of the _______________ .
A) Age ; Insured
B) Height ; Insured
C) Health ; Proposer
D) Weight ; Insured
E) Waist ; Proposer
23. The Insurance Ombudsman was created by the :
A) L.I.C
B) G.I.C
C) IRDA Act, 1999
D) Insurance Act, 1938
E) Govt. of India
24. Which is the famous institute in India offering specialized and short duration courses for the
employees of the insurance companies ?
A) National Insurance Academy, Pune
B) Insurance Institute of India, Mumbai
C) College of Insurance, Mumbai
D) Institute of Actuaries of India, Kolkata
E) Institute of Insurance & Risk Management, Hyderabad
25. Some insurers in India have created niches in their particular segments and the prime example is
the _________ insurance sector.
A) Health
B) Motor
C) Personal Accident
D) Marine
E) Travel
26. Selling of packaged products and simplified common underwriting practices are the
characteristics of which insurance segment ?
A) Individual
B) Retail -- SME
C) Corporate
D) Retail -- Individual
27. The mindset of a life insurance customer is generally reluctant and doubtful at the time of :
A) Purchasing the policy
B) Maturity of policy
C) Death Claim
D) Emergency withdrawal
E) Renewal
28. Choose the Odd one out :

A) Recommend a suitable need based policy to the client
B) Fully explain the products benefits as well as exclusions
C) Recommend an adequate sum assured
D) Selling a regular payment policy as a single payment
E) Recommend a suitable method of premium payment
29. The subject matter of an insurance contract is the :
A) Risk
B) Sum Assured
C) Insured
D) Policy wording
30. Identify the options which can be treated as a Valid contract :

A) Suresh buys a property from a friend at a low price
B) Suresh enters into a contract in a state of unsound mind
C) Suresh provides false information to involve Rakesh to enter into a contract
D) Suresh bribes an official to get into a contract
31. In case of disputes, who has the burden to prove the insurable interest, in life insurance :
A) Insurance Company
B) Proposer
C) Insured
D) Claimant
32. Identify the ways of indemnity in general insurance claims :

A) Repair
B) Replacement
C) Reinstatement
D) Cash Payment
E) All of the above
33. Agreed value policies are issued in insurance of :

A) Artwork
B) Paintings
C) Antiques
D) Vintage cars
E) All of the above
34. The principles of subrogation and contribution does not applies to :

A) Life insurance
B) Personal Accident insurance
C) Only A
D) Only B
E) Both A and B
35. Indisputability clause is applicable to only _________ insurance policies & comes under Section
____ ?
A) Health ; 43
B) Motor ; 45
C) Life ; 45
D) Marine ; 54
E) Life ; 41
36. Insurance contract is cancelled due to :

A) Not fulfilling the policy conditions
B) By not paying premiums
C) After end of term
D) All of the above
37. The insurance plans that provide only death cover are called :
A) Death plans
B) Term plans
C) Endowment plans
D) Whole life plans
E) Risk plans
38. What is the Mode of premium payment, in general, in the regular plans :
A) Monthly
B) Quarterly
C) Half Yearly
D) Yearly
E) All of the above
39. ULIP Plans are a combination of insurance plans and _______________ .

A) Investments
B) Mutual Funds
C) Equity Funds
D) Share market
E) Dividend plans
40. The process of transfer of investment from one fund into another is called :
A) Shifting
B) Redirection
C) Switching
D) Altering
41. The specific time after which the annuity payments start is called the :
A) Investment period
B) Return period
C) Benefit period
D) Annuity period
E) Deferment period
42. Which of the following is not a major category of non life insurance products as per the Insurance
Act 1938 ?
A) Fire
B) Marine
C) Motor
D) Miscellaneous
43. Which of the following insurance provides cover for goods in transit by sea, air, rail, road or by
post ?
A) Marine Cargo
B) Marine Hull
C) Transit policy
D) Transport policy
E) Cargo insurance
44. The rules and regulations of which of the Acts affects Motor insurance in India :
A) Insurance Act, 1938
B) Motor Vehicles Act, 1988
C) Central Motor Vehicles Rules, 1989
D) All of the above
45. Group policies are issued to those groups which have a common objective other than insurance.
A) True
B) False
46. The process of starting a lapsed policy again by payment of due premiums is called _________ .
A) Retrieval
B) Activation
C) Revival
D) Restoration
47. If there is a claim in the policy which is on a higher side than the specified limit, then a loading is
charged on the renewal premium. Such loading is called ___________ .
A) Copayment
B) Excess
C) Franchise
D) Malus
48. ___________ are any amendments to the standard conditions of the policy in the form of
modifications or additions and are written separately and / or attached with the policy document.
A) Exclusions
B) Warranties
C) Endorsements
D) Conditions
49. The amount set aside by the insurer’s out of the premium to meet out liabilities of expected future
claims are called :
A) Earned Premium Reserves
B) Incurred But Not Reported Reserves
C) Statutory Reserves
D) Unearned Premium Reserves
E) Solvency Reserves
50. The rate of deaths due to illness are known as :

A) Morbidity
B) Trauma rate
C) Mortality
D) Actuarial rate
1. Risk is the degree of ________________ of a loss / damage :

a) Certainty
b) Uncertainty
c) Measurability
d) Probability
e) Possibility
2. Catastrophic risks are characterized by a significantly higher number of claims occurring due to
events which are :
a) Large
b) Multiple
c) Small
d) Single
e) Higher
3. ___________ is something that can cause Harm and is also known as “ the accelerator of a Peril ”.
a) Risk
b) Enemy
c) Accident
d) Loss
e) Hazard
4. Loss of a limb permanently damaged due to an accident is an example of :

A) Actual loss
B) Consequential loss
C) Total loss
D) Actual total loss
E) Partial loss
5. The four ways to manage risks include all of the following, except:
A) Risk Identification
B) Risk Avoidance
C) Risk Reduction
D) Risk Retention
E) Risk Transfer
6. A technical term used to describe spreading of risk among different avenues is known as :
A) Value investing
B) Hedging
C) Risk spread ratio
D) Risk transfer
7. An individual can manage the risk associated to his / her life by _____________ of risk by buying a
_________________ plan.
A) Transfer ; Motor insurance
B) Retention ; Personal accident
C) Reduction ; Health insurance
D) Transfer ; Life insurance
E) Controlling ; Financial
8. Which of the following is an economic resource, is either tangible or intangible, is capable of being
owned and can produce a value.?
a) Car
b) House
c) Rented property
d) Factory
e) Asset
9. When was Triton Insurance Company Ltd established?

a) 1834
b) 1850
c) 1907
d) 1938
10. When was the Insurance Regulatory and Development Authority constituted?
a) 1938
b) 1971
c) 1993
d) 1999
11. In case of Life Insurance, premium will be influenced by which of the following factors :
A) Age & Sex
B) Occupation
C) Habits & Health conditions
D) Family History
E) All of the above
12. Living too long is considered as a :
A) Curse
B) Blessing
C) Fortune
D) Risk
13. Marine insurance deals with goods being transported by :

A) Only Sea
B) Only rail & roads
C) Only Air
D) Both sea and all marine related risks
E) All of the above
14. Which of the following insurance policies provide coverage of intangible assets ?
A) Exporters risk plans by Export Credit & Guarantee Corporation
B) Personal Accident plans
C) Professional Liability insurance plans
D) A and C
E) A and B
15. What are the ways to manage the risks :

A) to avoid or prevent the risks
B) To retain the risks
C) To reduce the risks
D) To transfer the risks
E) All of the above
16. The net profit of an insurance company is :

A) Distributed among the policy holders
B) Paid to the govt of India in emergency
C) Held as a reserve to pay claims of policies in force
D) Paid to the shareholders as dividend
E) Distributed among the top management
17. In general the risks which are covered under Reinsurance are _________ in nature.
A) Large
B) Catastrophic
C) Speculative
D) Dynamic
E) Fundamental
18. The non-life insurance business helps in economic growth of business community by :
A) Reducing the risk exposure
B) Helping to stand out again in cases of losses
C) Enabling the business to acquire loans from the banks easily
D) Safeguards the overall financial stability
E) All of the above
19. Which organization is doing Life insurance business but is outside the rules of IRDA and
Insurance Act ?
A) Life Insurance Corporation of India
B) Postal Life Insurance
C) Agriculture Insurance Co. Of India
D) SBI Life Insurance Co. Ltd
20. The duties of insurance agents in India are specified by the :

A) IRDA
B) Insurer
C) Both IRDA & Insurer
D) IRDA (Licensing of Insurance Agents) Regulations, 2000
E) Insurance Act, 1938
21. The insurance agents who hold the license to act as agent for both Life and General insurers, as
well as for a Health insurer, are called :
A) Corporate Agents
B) Brokers
C) Composite Agents
D) TPA’s
E) Combined Agents
22. These are the cases in which the medical examiners help is sought by insurance companies.
Choose the incorrect option :
A) When a higher sum assured is demanded by the Proposer
B) In doubtful cases of early death claim
C) Veterinary doctors are used In Cattle insurance
D) To assess the correct age of the proposer
E) To assess the proximate cause in doubtful cases of health insurance
23. The tenure of Insurance Ombudsman is for :

A) 1 year
B) 2
C) 5
D) 3
E) 10
24. Which of the following Acts has the provisions for monitoring and control of operations of
Insurance companies :
A) Insurance Act, 1938
B) IRDA Act, 1999
C) Deposit Insurance & Credit Guarantee Act, 1961
D) Public Liability Insurance Act, 1991
25. The term used to describe the work output of one department being an input for the work of
another department in the same organisation is called ____________ customer.
A) Internal
B) External
C) Output
D) Relational
E) Inside
26. Very high Sum Assured, special premiums and case-to-case underwriting are the characteristics
of which insurance segment ?
A) Corporate
B) High Net Worth Individuals
C) Non Resident Indians
D) Retail -- SME
E) Multi-National Companies
27. How will be the mindset of the person who receives the death claim in life insurance ?
A) Reluctant
B) Doubtful
C) Regretful
D) Happy
E) Satisfied and grateful
28. The Code of Conduct for insurance agents has been prescribed in IRDA (Licensing of Insurance
Agents) Regulations, :
A) 2000
B) 2002
C) 2001
D) 2004
E) 1999
29. For an insurance contract to be valid and enforceable, the subject matter should be :
A) Insured
B) Risk
C) Legal
D) Policy wordings
E) Sum Assured
30. A person’s insurable interest in his own life is :

A) Limited
B) Partial
C) Unlimited
D) 50 %
E) Double
31. Who among the following has unlimited and mutual insurable interest in each other :
A) Employer - Employee
B) Partners of a firm
C) Husband - Wife
D) Creditor - Debtor
E) Bank - Mortgage
32. In motor insurance policies, the sum assured of the policy is known as IDV i.e :
A) Insured’s Declared Value
B) Insurer’s Declaration Value
C) Insured’s Declaration Value
D) Insurer’s Declared Value
33. What are the corollaries of the Principle of Indemnity ?

A) Utmost Good Faith
B) Subrogation Clause
C) Contribution clause
D) Both A and B
E) Both B and C
34. The principle of Contribution works on the basis of proportionate :

A) Liability
B) Insurance
C) Losses
D) Indemnity
35. In case of non-life insurance the duty of disclosure arises at the time of :
A) Claim
B) Renewal
C) Insurance
D) Re-insurance
E) Payment of Premium
36. An individual is said to enter into a contract if he is ______ years old :

A) 21
B) 18
C) 25
D) 20
E) 23
37. The plans which also have a savings element along with death cover are called :
A) Endowment plans
B) Pure Endowment plans
C) Endowment Assurance plans
D) Whole Life Risk plans
E) Pure Risk plans
38. The amount of Rider Sum Assured can be greater than the Basic Sum Assured.
A) True
B) False
39. The major portion of this fund is invested in the stock markets. It is called :
A) Debt fund
B) Equity fund
C) Stock fund
D) Capital fund
E) Money Market fund
40. The basis of calculation of the NAV in ULIP Plans is :

A) Weekly
B) Daily
C) Fortnightly
D) Monthly
E) Bi-monthly
41. The insurance plans which give periodic pay outs to the policyholder are called :
A) Joint plans
B) Annuities
C) Whole Life plans
D) Unit Linked Insurance plans
42. What is the second largest class of non life insurance in India ?
A) Fire
B) Marine
C) Miscellaneous
D) Health
E) Motor
43. Export import shipments in a Marine Cargo insurance are covered under the terms of :
A) All Cargo clauses
B) Institute Cargo clauses
C) Custom Cargo clauses
D) Local Cargo clauses
E) Ministry of Shipping Cargo clauses
44. A comprehensive Motor policy covers the damage to which of the following :
A) Car only
B) Owner
C) Driver
D) Third parties
E) All of the above
45. If there is no claim during the years, the health insurance company gives a discount on the
renewal premium. This is called :
A) Cumulative Bonus
B) Policy Bonus
C) No Claim Bonus
D) Renewal Discount
46. Which policy protects the Employer from the losses for accidents to the employees while at work
?
A) Workmen’s Compensation insurance
B) Employee All Risk policy
C) Factory Risk policy
D) Industrial All Risk policy
E) Plant & Machinery insurance
47. The calculation of surrender value depends upon the __________ .

A) Surrender Value Factor
B) Paid Up Value
C) Only A
D) Only B
E) Both A and B
48. The fund made out of the contributions of the State and the Central governments to pay for the
claims for third parties where the motor vehicle is absconding after the Hit & Run accidents is known
as ____________ .
A) State Accident Fund
B) Hit & Run Fund
C) MACT Fund
D) Central Trauma Fund
E) Solatium Fund
49. Any wrong statements made by the person requesting for insurance, made in writing or may be
verbal, which are related to the risk, are called ______________ .
A) Representations
B) Conditions precedent to contract
C) Conditions precedent to liability
D) Misrepresentations
50. Which ratio is an indicator of insurer’s ability to pay claims ?

A) Incurred Claims Ratio
B) Solvency Ratio
C) Claims Settlement Ratio
D) Loss Ratio
1. Which of the option is Correct :

a) Risk is the chance of loss or damage
b) Peril is the direct cause of loss or damage
c) Only a
d) Only b
e) Both a & b
2. Those risks which are quantified or measured in monetary terms are called :
a) Pure risks
b) Dynamic risks
c) Financial risks
d) Business risks
e) Enterprise risks
3. State whether the following statements are True or False :

A) An event or incident that may cause a Loss is called a Peril.
B) Any condition or situation that increases the severity of a Peril is called Hazard.
a) Stat. A is True & Stat. B is False
b) Stat. B is True & Stat. A is False
c) Both the Stat. A & B are True
d) Both the Stat. A & B are False
4. Risk Financing techniques try to make good the losses. Which among the following comes under
Risk Financing :
A) Transfer
B) Retention
C) Reduction
D) Both A & C
E) Both A & B
5. Excess Clause in insurance policies is the example of :

A) Risk reduction
B) Risk retention
C) Risk control
D) Risk transfer
E) All of the above
6. Which among the following is not used in industries to reduce the physical risks / hazards :
A) Alarm systems
B) Helmets
C) Sharp edged power tools
D) Fire fighting instruments
E) Masks and gloves
7. The business of insurance is related to the protection of ___________ value of assets.

a) Full
b) Ownership
c) Economic
d) Financial
e) At Par
8. When was Life Insurance sector nationalised?

a) 1834
b) 1907
c) 1938
d) 1956
9. Which one of the following does not belong to the major general insurance private sector
companies in India?
a) Bajaj Allianz General Insurance
b) Reliance General Insurance
c) Royal Sundaram Alliance Insurance
d) The Oriental Insurace Company
10. In the calculation of risk premium, which of the following factors will have direct impact on
assessing the Moral Hazard ?
A) Age & Sex
B) Occupation
C) Family History
D) Health conditions & personal Habits
11. Insurance provides protection against losses due to unfortunate events which are :
A) Natural
B) Man made
C) Third party
D) All of the above
12. Which among the listed is termed as the broadest / biggest category of General insurance ?
A) Fire insurance
B) Motor insurance
C) Miscellaneous insurance
D) Liability insurance
E) Marine insurance
13. Match the types of risks associated with intangible assets with the types of persons :
A) Loss of the voice 1. Engineer
B) Loss to the legs 2. Doctor
C) Loss because of wrong advice 3. Dancer
D) Loss due to negligence during operation 4. Singer
E) Loss of lives due to collapse of a bridge 5. Lawyer
14. From the below options, choose the odd one out.
It may be a prudent decision to retain a risk if :
A) The possibility of occurring seems low
B) A reserve fund is already in place
C) The possibility of occurring seems high
D) No impact on profit if the risk occurs
E) The cost of insurance is higher than the cost of risk
15. Keeping in view the revenue and expenses of insurance companies, match the following :
A) Premiums collected 1. Expenses
B) Payment of claims 2. Expenses
C) Income from interests on investments 3. Revenue
D) Salaries, commission and rent 4. Revenue
16. The amount / limit of risk which the insurance company decides to keep with itself is called:
A) Self Limit
B) Ceding limit
C) Retention limit
D) Retro limit
17. The Govt of India uses some special plans designed by LIC and GIC to promote its welfare
objectives towards the general public. Such schemes are called :
A) Public welfare schemes
B) Social Security plans
C) Social Security Schemes
D) Unit Trust Plans
E) Social schemes
18. Which of the following are the Specialised insurers in India ?
A) Export Credit & Guarantee Corporation of India.
B) Apollo Munich Health Insurance Co. Ltd.
C) Star Health & Allied Insurance Cop. Ltd.
D) Agriculture Insurance Co. Of India.
E) All of the above
19. Brokers are appointed by the respective insurance companies for capturing business for the
particular companies.
A) True
B) False
20. An individual who plays the role of a “Loss Assessor” in insurance business is called :
A) Surveyor
B) Assessor
C) Indemnifier
D) Loss Controller
E) Loss Aggregater
21. Which among the following are the services provided by the TPA ?
A) Networking with hospitals
B) Cashless claim facility
C) Final claim processing & settlement
D) Only A & B
E) All A, B and C
22. Which of the following Statement, is / are true with regard to the Powers / Rights of the
Ombudsman :
1) Insurance Ombudsman is a judicial authority.
2) Lawyers are allowed to argue the case with Ombudsman.
A) Only Stat. 1 is True
B) Only Stat. 2 is True
C) Both the Stat. are True
D) Both the Stat. Are False
23. What is the prime purpose of IRDA as an Insurance regulator ?

Choose the most appropriate option :
A) To ensure that every Citizen of India gets insurance coverage
B) To ensure that insurance companies run in profit & survive in long run
C) To ensure that weaker & rural society gets adequate insurance
D) To protect the investments of the insurance companies
E) To protect the interests of the policy holders
24. Among the following, identify the broad categories of Insured in India.
1) Retail -- Individual
2) Retail -- Stores
3) Retail -- SME
4) Corporate
5) HNI’s and NRI’s
A) 1, 2 and 4
B) 2, 3 and 4
C) 1, 2, 3 and 5
D) 1, 3 and 4
E) All of the above
25. A customers ______ and interests changes while buying different types of products or doing
different financial transactions.
A) Needs
B) Choices
C) Perception
D) Demand
E) Considerations
26. In case of general insurance, what will be the mindset of the person getting the claim ?
A) Will experience some relief that he bought insurance
B) He is distressed as he is insecure about the claim procedure
C) Demanding and tries to get maximum amount from Insurer
D) Perhaps may be angry that loss is not fully compensated
E) All of the above
27. Every insurance agent must adhere to the IRDA Code of Conduct or it would lead to
disqualification of agent licence under Section :
A) 42 (4) (g) of Insurance Act, 1938
B) 42 (4) (g) of IRDA Agents Regulations, 2000
C) 42 (4) of Insurance Act, 1938
D) 42 of IRDA Agents Regulations, 2000
28. Which of the following are called the “ basis “ of a Contract ?

A) Offer
B) Acceptance
C) Offer & Acceptance
D) Proposal & Acceptance
29. In an insurance contract, insurable interest needs to be present at the time of :
A) Claim
B) Revival
C) Inception
D) Surrender
E) All of the above
30. Which is the insurance where insurable interest is proved only at the time of making a claim ?
A) Marine Cargo
B) Marine Hull
C) Property
D) Life
E) Motor
31. In liability policies, the insured is indemnified as per the :

A) Sum Assured
B) Sum Insured
C) Third Party
D) Agreed Value
E) Court of Law
32. The process of shifting of rights after indemnity from the insured person to the insurance
company is called :
A) Contribution
B) Transfer
C) Subrogation
D) Indemnity
33. In insurance contracts, the principle of Utmost Good Faith applies to :

A) Only Insurer
B) Only Proposer
C) Both Insurer & Proposer
D) Nobody
34. Discount on premium is given on adopting safety measures by customers in case of :

A) Life insurance
B) Personal Accident insurance
C) Health Insurance
D) General Insurance
E) All of the above
35. Which are the two basic plans of Life insurance used for designing all further combinations of
plans ?
A) Term & Whole Life
B) Endowment & Whole Life
C) Term & Pure Endowment
D) Term & Money Back
E) Endowment & Money Back
36. Pure Endowment plans are those which provide only _________ benefit.
A) Risk
B) Survival
C) Maturity
D) Death
E) Saving
37. The insurance plans providing the option of increasing / decreasing the S.A during the policy
tenure are called :
A) Level plans
B) Step plans
C) Dynamic S.A plans
D) Convertible plans
38. The type of fund in ULIP Plan having low risk and low returns is :
A) Debt fund
B) Equity fund
C) Capital fund
D) Balanced fund
E) Money Market fund
39. The risk of investment in ULIP Plans is borne by the :

A) Insurance company
B) Policyholder
C) Agent
D) Investment company
40. A single policy covering multiple people is known as :

A) Group policy
B) Master policy
C) Joint policy
D) Corporate policy
41. Marine insurance is also called as :
A) Cargo insurance
B) Ship insurance
C) Sea insurance
D) Transit insurance
E) Transport insurance
42. Marine Hull insurance covers the loss or damage to :

A) Ocean going ships
B) Fishing vessels
C) Sailing vessels
D) Loos due to piracy
E) All of the above
43. Which of the following Third party insurance is compulsory under the law ?
A) Liability Only Motor policy
B) Comprehensive Motor policy
C) Own Damage Motor policy
D) Vintage Car policy
44. The insurance which provides indemnity for injuries to third parties or their property is called :
A) Liability insurance
B) Motor insurance
C) Mediclaim
D) Miscellaneous insurance
E) Public injury insurance
45. The engineering insurance covers the following risks. Choose the Odd one out.
A) Contractor All Risk
B) Erection of Electrical plants
C) Breakdown of Machinery
D) Delay in Start Up of projects
E) Fraud done by Factory manager
46. Overseas Medical insurance also covers loss of baggage or passport during travel.
A) True
B) False
47. A traditional life insurance policy acquires Paid Up value after the payment of premiums of _____
years.
A) 2
B) 1
C) 3
D) 5
48. The process of settling the disputed claims by the mutual consent of both parties out of courts is
called _________ .
A) Arbitration
B) Negotiation
C) Arbitrage
D) Conciliation
E) Mediation
49. These must be strictly complied with and breach of __________, makes the policy voidable.
A) Warranties
B) Conditions
C) Endorsements
D) Guarantees
50. Any major surgery performed on the insured during the term of a Life insurance policy is an
example of :
A) Condition precedent to liability
B) Express condition
C) Condition subsequent to liability
D) Implied condition
1. Risk can be :
a) Identified
b) Measured
c) Controlled
d) Financed
e) All of the above
2. Choose the Odd one out :

a) Credit risk
b) Liquidity risk
c) Currency risk
d) Health risk
e) Foreign Exchange risk
3. Choose the correct option for the Statements given below :

a) Physical hazard refers to the characteristics and qualities of the subject matter which is proposed
to be insured.
b) Moral hazard refers to the character of the person who is approaching the insurance company for
insurance.
c) Only a
d) Only b
e) Both a and b
4. State the full form of PML .

A) Proximate Maximum Loss
B) Possible Maximum Loss
C) Probable Minimum Loss
D) Probable Maximum Loss
E) Proximate Minimum Loss
5. Risk retention in large organisations are done by following ways :

A) Meeting costs from current revenue
B) Creating a contingency fund
C) Opting for insurance deductible in a policy
D) Implementing employee retention schemes
E) All of the above
6. Which of the following is not a Loss Reduction technique :
A) Diversification of business
B) Separation of subjects exposed to risks
C) Duplication of data files
D) Hedging of financial transactions
E) Review & updating Insurance Planning
7. The insurance company provides coverage for certain amount of money known as
__________ in lieu of a certain amount of consideration known as __________ .
a) Coverage amount ; Interest
b) Risk amount ; Dividend
c) Sum Value ; Bonus
d) Sum Assured ; Premium
e) Policy Value ; Installment
8. When was general insurance business nationalised?

a) 1938
b) 1971
c) 1973
d) 1993
9. When was the General Insurance Council formed?

a) 1938
b) 1957
c) 1973
d) 1971
10. Which of the following is called a sub-standard risk:

A) Risk is assessed to be greater & higher premium is charged
B) Risk is assessed to be lower & higher premium is charged
C) Risk is assessed to be lower & lower premium is charged
D) All of the above
11. General insurance does not covers :

A) Liability insurance
B) Marine insurance
C) Fire insurance
D) Life insurance
E) Property insurance
12. Which of the following risks are covered under Health Insurance :
A) Illness
B) Accidents
C) Both a & b
D) Only a
E) Only b
13. The Export Credit Guarantee Corporation of India covers risks related to foreign trade of :
A) Importers
B) Exporters
C) Only a
D) Only b
E) Both a and b
14. In the transfer of risk, the risk is spread over a group of people who are exposed to a __________
risk.
A) Large
B) Similar
C) Small
D) Equal
E) Pure
15. The insurance companies make provisions for the Solvency margins as stipulated by the :
A) Law agencies
B) Management
C) IRDAI
D) Govt. Of India
E) Reinsurer
16. The agreements which denotes the retention limits for various risks between the insurance
company and the reinsurer are called as :
A) Reinsurance agreements
B) Reinsurance quotas
C) Treaties
D) Pool arrangements
E) Second agreements
17. Prior to 1999, how many subsidiaries of GIC of India were there transacting insurance business in
India ?
A) Two
B) Five
C) Four
D) Three
E) Six
18. Who is the Licensing authority of insurance Agents in India ?
A) L.I.C
B) G.I.C
C) IRDA
D) SEBI
E) RBI
19. A designated individual can become a Corporate Agent by passing examination and getting
training.
A) True
B) False
20. The technical specialists also known as “Loss Assessors” work in the field of :
A) Life Insurance
B) General Insurance
C) Health Insurance
D) Motor Insurance
E) Marine Insurance
22. Which of the following Statement, is / are true :

1) TPA should have a share capital of at least Rs. 1 crore.
2) One of the Directors must be at least a qualified Medical practitioner.
23. Which of the following Statement, is / are true with regard to the Awards / Orders of the
Ombudsman :
1) The insurance company has to comply the final order of Ombudsman within 15 days.
2) Insurance Ombudsman can pass any award for the insured not exceeding Rs.20 lacs.
24. Indian market is following the international trends in the remote selling of policies in individual
segment by making the use of :
A) Telephone
B) Internet
C) Online advertising
D) Call centers
25. The insurance customer receives nothing at the time of buying and its difficult to visualise the
products need because insurance product is :
A) Unpleasant
B) Unnecessary
C) Doubtful
D) Intangible
E) Complex
26. Who among the following cannot contribute directly in keeping the insurance customer satisfied
during the claim process ?
A) Agents, Brokers & Corporate Agents
B) Surveyors
C) TPA’s
D) Officers in Claim Department
E) All of the above
27. Which of the two sectors of Indian insurance industry are the most prone to fraudulent claims?
A) Motor
B) Health
C) Fire
D) Both A and C
E) Both A and B
28. Which of the following document is called the “basis” of an insurance contract ?
A) Policy document
B) Proposal Form
C) Application of Proposer
D) Policy wordings
E) Risk cover / Sum Assured
29. _________________ is the legal right of a person to insure the subject matter, related to himself,
his family, his assets or any other related to him.
A) Insurance
B) Indemnity
C) Policy coverage
D) Insurable interest
E) Risk transfer
30. The fire, motor, personal accident and householder’s policies are individual contracts and come
under :
A) Individual policies
B) Personal contracts
C) Transferable policies
D) General insurance
E) Miscellaneous insurance
31. In which class of general insurance, the principle of indemnity is strictly followed ?
A) Fire
B) Marine
C) Motor
D) Liability
E) All of the above
32. After paying the claim to the Insured the insurance company has the right to recover the losses
from the :
A) Re-insurer
B) Third party
C) Insurance company of the third party
D) Negligent third party
E) Nobody
33. Which situation leads to the breach of duty of Utmost Good Faith :
A) Non disclosure of material facts
B) Concealment of material fact
C) Fraudulent misrepresentation of facts
D) All of the above
34. Insurance companies provide cover only against the losses caused by ________ perils.
A) Closest
B) Riskiest
C) Hazardous
D) Largest
E) Insured
35. Which is the broad classification of Insurance industry in India ?

A) Life, Non-Life & Health Insurance
B) Life & Non-Life insurance
C) Life, General, Health & Motor insurance
D) Life, General, Casualty & Property insurance
E) Life, Non-life & Miscellaneous insurance
36. The insurance policy which does not have a specified maturity period is known as :
A) Permanent policy
B) Whole Life policy
C) Life Long policy
D) Full Life policy
37. In an insurance policy, the Maturity Benefit and the Survival Benefit are one and the same things.
A) True
B) False
38. Which among the following is not an example of fixed income securities ?
A) Government Bonds
B) Corporate Bonds
C) Equity shares
D) Fixed Deposits
E) Treasury Bills
39. The popularity of ULIP Plans are often associated with the bull run in :
A) Bond market
B) Capital market
C) Money Market
D) Economy
E) Forex Market
40. In a group policy, the benefits of the members of the group are decided on :
A) Case to case basis
B) Individual basis
C) Jointly
D) Uniform basis
E) As per policy terms
41. Liability insurance covers the liabilities of the insured to anyone arising out of :
A) Law
B) Contractual obligation
C) Injury to third party
D) Public liabilities
E) All of the above
42. War and strikes are covered under the voluntary War & Risks Scheme for the ship owners
introduced by :
A) Govt of India.
B) Ministry of Shipping
C) Customs Department
D) Port Trust of India
E) Marine Hull insurance
43. Personal Accidents policies provide the following coverage arising out of any kinds of accidents
leading to :
A) Death only
B) Disablement only
C) Only A
D) Only B
E) Both A and B
44. Liability insurance policies does not include :

A) Public liability
B) Product liability
C) Personal Accident policy
D) Professional Indemnity Policy
E) Errors & Omissions Policy
45. Boiler & Pressure plant insurance policies cover damages caused by :
A) Fire
B) Explosions
C) Terrorist activities
D) Leakages of pressures
E) All of the above
46. Which of the insurance policies are entitled for Bonuses ?

A) Participating policies
B) Non-participating policies
C) With Profit plans
D) Both B and C
E) Both A and C
47. The person who applies for insurance to an Insurer is known as _________ in insurance
terminology.
A) Prospect
B) Applicant
C) Proposer
D) Customer
48. The form in which the proposer gives his details in writing, asks for the type of cover and is also
the “basis” of an insurance contract is known as ___________ .
A) Application Form
B) Proposal Form
C) Underwriting Form
D) Insurance Form
49. The process of full transfer of rights of the policyholder to someone else is called :
A) Assignment
B) Conditional assignment
C) Absolute assignment
D) Surrender
50. The professional person who calculates the premium as per Mortality & Morbidity tables is known
as :
A) Actuary
B) Claims Officer
C) Agent
D) Underwriter
E) Development Officer

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AIIBF MCQs for I.I.

I Licentiate / Associate Exams : Whats App : 79996-88188

AURUM INSTITUTE OF INSURANCE, BANKING & FINANCE (Indore)

SET 1 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE

1. ___________ is known as the cause of Loss.

2. What is the co-relation between Risk and Probability ?

6. Elimination of the possible hazards is a way of _______________ the risks.

7. Which of the following comes under risk transfer techniques :

8. Insurance primarily takes care of :

9. Insurance works on the principle of :

10. Which one is marked as the Birth date of L.I.C ?

13. In some countries outside India, General insurance is also called as :

16. The purpose of an insurance company is to :

19. Select the odd one out :

28. Which of the following constitutes the Ethics in Business ?

29. Insurance is a contract between two parties. The 2 parties are :

36. Proximate cause is known to be the _________ cause.

41. The risk of living too long is covered by :

42. The risk cover in a group policy is given to :

AURUM’S 7 SET of MCQ’s for I.I.I LICENTIATE Exam IC 01

SET 2 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE

1. Which of the following is not an example of a Peril :

5. The formula of Maximum Probable Loss (MPL) is the same as the :

9. When was the General Insurance Corporation of India incorporated?

10. Which of the following is not included in the concept of Pooling :

13. Which of the statements is not correct about insurance ?

14. ______________ is unavoidable in life.

17. Who is the worlds largest Reinsurance company :

22. Insurance councils are constituted under the provisions of :

23. Which is the training wing of the Insurance Institute of India ?

26. The real value of Life insurance is experienced at the time of :

29. In insurance the policy document is the evidence of :

31. The principle of indemnity ensures that :

33. In general, the principle of Contribution is also termed as :

34. Insurance contracts form a legal relationship and are based on :

39. The Money Market fund is also termed as :

40. The annuities work in just the reverse way of :

44. The cashless treatments given by Health insurance companies to customers is :

45. Which of the following risk is excluded in a Liability policy ?

AURUM’S 7 SET of MCQ’s for I.I.I LICENTIATE Exam IC 01

SET 3 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE

2. Which of the following is True :

4. The purpose of risk management is :

6. Provision of an additional engine in an aircraft, maintaining inventories of essential machine

8. Which of the following Risks are associated with your Car ?

12. To be insurable, the loss must be :

13. Choose the most appropriate option :

14. What are the advantages of insurance :

16. Insurance works on the principle of :

21. Which among the following are not regulated by IRDAI ?

22. The medical examiners are important intermediaries used in :

39. The maturity value in case of ULIP Plans is called as :

42. A comprehensive Fire policy may provide cover for :

43. What is the largest class of miscellaneous insurance in India ?

49. Suicide Clause in a life insurance policy is a type of ___________ .

AURUM’S 7 SET of MCQ’s for I.I.I LICENTIATE Exam IC 01

SET 4 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE

4. The actual loss includes the cost of :