Chapter 1

INTRODUCTION TO INSURANCE

1.Which among the following is the regulator for the insurance industry in
India?
I. Insurance Authority of India
II. Insurance Regulatory and Development Authority of India
III. Life Insurance Corporation of India
IV. General Insurance Corporation of India

2.Which among the following is a secondary burden of risk?

I. Business interruption cost
II. Goods damaged cost
III. Setting aside reserves as a provision for meeting potential losses in the
future
IV. Hospitalisation costs as a result of heart attack

3.Which among the following is a method of risk transfer?

I. Bank FD
II. Insurance
III. Equity shares
IV. Real estate

4.Which among the following scenarios warrants insurance?

I. The sole bread winner of a family might die untimely
II. A person may lose his wallet
III. Stock prices may fall drastically
IV. A house may lose value due to natural wear and tear

5.Which of the below insurance scheme is run by an insurer and not

sponsored by the Government?
I. Employees State Insurance Corporation
II. Crop Insurance Scheme
III. Jan Arogya
IV. All of the above

6.Risk transfer through risk pooling is called ________.

I. Savings
II. Investments
III. Insurance
IV. Risk mitigation
7.The measures to reduce chances of occurrence of risk are known as _____.
I. Risk retention
II. Loss prevention
III. Risk transfer
IV. Risk avoidance

8.By transferring risk to insurer, it becomes possible ___________.

I. To become careless about our assets
II. To make money from insurance in the event of a loss
III. To ignore the potential risks facing our assets
IV. To enjoy peace of mind and plan one‟s business more effectively

9.Origins of modern insurance business can be traced to __________.

I. Bottomry
II. Lloyds
III. Rhodes
IV. Malhotra Committee

10.In insurance context „risk retention‟ indicates a situation where _____.

I. Possibility of loss or damage is not there
II. Loss producing event has no value
III. Property is covered by insurance
IV. One decides to bear the risk and its effects

11.Which of the following statement is true?

I. Insurance protects the asset
II. Insurance prevents its loss
III. Insurance reduces possibilities of loss
IV. Insurance pays when there is loss of asset

12.Out of 400 houses, each valued at Rs. 20,000, on an average 4 houses get
burnt every year resulting in a combined loss of Rs. 80,000. What should be
the annual contribution of each house owner to make good this loss?
I. Rs.100/-
II. Rs.200/-
III. Rs.80/-
IV. Rs.400/-

13.Which of the following statements is true?

I. Insurance is a method of sharing the losses of a „few‟ by „many‟
II. Insurance is a method of transferring the risk of an individual to another
individual
III. Insurance is a method of sharing the losses of a „many‟ by a few
IV. Insurance is a method of transferring the gains of a few to the many
14.Why do insurers arrange for survey and inspection of the property before
acceptance of a risk?
I. To assess the risk for rating purposes
II. To find out how the insured purchased the property
III. To find out whether other insurers have also inspected the property
IV. To find out whether neighbouring property also can be insured

15.Which of the below option best describes the process of insurance?

I. Sharing the losses of many by a few
II. Sharing the losses of few by many
III. One sharing the losses of few
IV. Sharing of losses through subsidy

Chapter 2
CUSTOMER SERVICE

16.What is meant by customer lifetime value?

I. Sum of costs incurred while servicing the customer over his lifetime
II. Rank given to customer based on business generated
III. Sum of economic benefits that can be achieved by building a long term
relationship with the customer
IV. Maximum insurance that can be attributed to the customer

17.Identify the scenario where a debate on the need for insurance is not
required.
I. Property insurance
II. Business liability insurance
III. Motor insurance for third party liability
IV. Fire insurance

18.As per the Consumer Protection Act, 1986, who cannot be classified as a
consumer?
I. Hires goods / services for personal use
II. A person who buys goods for resale purpose
III. Buys goods and services for a consideration and uses them
IV. Uses the services of another for a consideration

19.What does not go on to make a healthy relationship?

I. Attraction
II. Trust
III. Communication
IV. Scepticism
20.Which among the following is not an element of active listening?
I. Paying good attention
II. Being extremely judgemental
III. Empathetic listening
IV. Responding appropriately

21.Which among the following is not a characteristic of ethical behaviour?

I. Making adequate disclosures to enable the clients to make an informed
decision
II. Maintaining confidentiality of client‟s business and personal information
III. Placing self-interest ahead of client‟s interests
IV. Placing client‟s interest ahead of self interest

22._____________ is not a tangible good.

I. House
II. Insurance
III. Mobile Phone
IV. A pair of jeans

23._______________ is not an indicator of service quality.

I. Cleverness
II. Reliability
III. Empathy
IV. Responsiveness

24.In India _______________ insurance is mandatory.

I. Motor third party liability
II. Fire insurance for houses
III. Travel insurance for domestic travel
IV. Personal accident

25.One of the methods of reducing insurance cost of an insured is __________

I. Reinsurance
II. Deductible
III. Co-insurance
IV. Rebate

26.A customer having complaint regarding his insurance policy can approach
IRDA through
I. IGMS
II. District Consumer Forum
III. Ombudsman
IV. IGMS or District Consumer Forum or Ombudsman

27.Consumer Protection Act deals with:

I. Complaint against insurance companies
II. Complaint against shopkeepers
III. Complaint against brand
IV. Complaint against insurance companies, brand and shopkeepers

28___________ has jurisdiction to entertain matters where value of goods or

services and the compensation claim is up to 20 lakhs
I. High Court
II. District Forum
III. State Commission
IV. National Commission

29.In customer relationship the first impression is created:

I. By being confident
II. By being on time
III. By showing interest
IV. By being on time, showing interest and being confident

30.Select the correct statement:

I. Ethical behaviour is impossible while selling insurance
II. Ethical behaviour is not necessary for insurance agents
III. Ethical behaviour helps in developing trust between the agent and the
insurer
IV. Ethical behaviour is expected from the top management only

31.Active Listening involves:

I. Paying attention to the speaker
II. Giving an occasional nod and smile
III. Providing feedback
IV. Paying attention to the speaker, giving an occasional nod and smile and
providing feedback

CHAPTER 3
GRIEVANCE REDRESSAL MECHANISM

32.Expand the term IGMS.

I. Insurance General Management System
II. Indian General Management System
III. Integrated Grievance Management System
IV. Intelligent Grievance Management System

33.Which of the below consumer grievance redressal agencies would handle

consumer disputes amounting between Rs. 20 lakhs and Rs. 100 lakhs?
I. District Forum
II. State Commission
III. National Commission
IV. Zilla Parishad

34.Which among the following cannot form the basis for a valid consumer
complaint?
I. Shopkeeper charging a price above the MRP for a product
II. Shopkeeper not advising the customer on the best product in a category
III. Allergy warning not provided on a drug bottle
IV. Faulty products

35.Which of the below will be the most appropriate option for a customer to
lodge an insurance policy related complaint?
I. Police
II. Supreme Court
III. Insurance Ombudsman
IV. District Court

36.Which of the below statement is correct with regards to the territorial

jurisdiction of the Insurance Ombudsman?
I. Insurance Ombudsman has National jurisdiction
II. Insurance Ombudsman has State jurisdiction
III. Insurance Ombudsman has District jurisdiction
IV. Insurance Ombudsman operates only within the specified territorial limits

37.How is the complaint to be launched with an insurance ombudsman?

I. The complaint is to be made in writing
II. The complaint is to be made orally over the phone
III. The complaint is to be made orally in a face to face manner
IV. The complaint is to be made through newspaper advertisement

38.What is the time limit for approaching an Insurance Ombudsman?

I. Within two years of rejection of the complaint by the insurer
II. Within three years of rejection of the complaint by the insurer
III. Within one year of rejection of the complaint by the insurer
IV. Within one month of rejection of the complaint by the insurer

39.Which among the following is not a pre-requisite for launching a complaint

with the Ombudsman?
I. The complaint must be by an individual on a „Personal Lines‟ insurance
II. The complaint must be lodged within 1 year of the insurer rejecting the
complaint
III. Complainant has to approach a consumer forum prior to the Ombudsman
IV. The total relief sought must be within an amount of Rs.20 lakhs.

40.Are there any fee / charges that need to be paid for lodging the complaint
with the Ombudsman?
I. A fee of Rs 100 needs to be paid
II. No fee or charges need to be paid
III. 20% of the relief sought must be paid as fee
IV. 10% of the relief sought must be paid as fee

41.The ______________ has jurisdiction to entertain complaints, where value of

the goods or services and the compensation claimed is up to Rs.20 lakhs.
I. District Forum
II. State Commission
III. Zilla Parishad
IV. National Commission

42.Can a complaint be launched against a private insurer?

I. Complaints can be launched against public insurers only
II. Yes, complaint can be launched against private insurers
III. Complaint can be launched against private insurers only in the Life Sector
IV. Complaint can be launched against private insurers only in the Non-Life
Sector

CHAPTER 5
LEGAL PRINCIPLES OFANINSURANCECONTRACT

43.Which among the following is an example of coercion?

I. Ramesh signs a contract without having knowledge of the fine print
II. Ramesh threatens to kill Mahesh if he does not sign the contract
III. Ramesh uses his professional standing to get Mahesh to sign a contract
IV. Ramesh provides false information to get Mahesh to sign a contract

44.Which among the following options cannot be insured by Ramesh?

I. Ramesh‟s house
II. Ramesh‟s spouse
III. Ramesh‟s friend
IV. Ramesh‟s parents

45.Which element of a valid contract deals with premium?

I. Offer and acceptance
II. Consideration
III. Free consent
IV. Capacity of parties to contract

46._____________ relates to inaccurate statements, which are made without

any fraudulent intention.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation

_47._______________ involves pressure applied through criminal means.

I. Fraud
II. Undue influence
III. Coercion
IV. Mistake
48.Which among the following is true regarding life insurance contracts? 103
I. They are verbal contracts not legally enforceable
II. They are verbal which are legally enforceable
III. They are contracts between two parties (insurer and insured) as per
requirements of Indian Contract Act, 1872
IV. They are similar to wager contracts

49.Which of the below is not a valid consideration for a contract?

I. Money
II. Property
III. Bribe
IV. Jewellery

50.Which of the below party is not eligible to enter into a life insurance
contract?
I. Business owner
II. Minor
III. House wife
IV. Government employee

51.Which of the below action showcases the principle of “Uberrima Fides”?

I. Lying about known medical conditions on an insurance proposal form
II. Not revealing known material facts on an insurance proposal form
III. Disclosing known material facts on an insurance proposal form
IV. Paying premium on time

52.Which of the below is not correct with regards to insurable interest?

I. Father taking out insurance policy on his son
II. Spouses taking out insurance on one another
III. Friends taking out insurance on one another
IV. Employer taking out insurance on employees

53.When is it essential for insurable interest to be present in case of life

insurance?
I. At the time of taking out insurance
II. At the time of claim
III. Insurable interest is not required in case of life insurance
IV. Either at time of policy purchase or at the time of claim

54.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.
I. Pneumonia
II. Broken back
III. Falling off a horse
IV. Surgery
 SECTION 2
LIFE SECTION

Chapter 6
What Life Insurance Involves

55.How does diversification reduce risks in financial markets?

I. Collecting funds from multiple sources and investing them in one place
II. Investing funds across various asset classes
III. Maintaining time difference between investments
IV. Investing in safe assets

56.Which of the below is not an element of the life insurance business?

I. Asset
II. Risk
III. Principle of mutuality
IV. Subsidy

57.Who devised the concept of HLV?

I. Dr. Martin Luther King
II. Warren Buffet
III. Prof. Hubener
IV. George Soros

58.Which of the below mentioned insurance plans has the least or no amount
of savings element?
I. Term insurance plan
II. Endowment plan
III. Whole life plan
IV. Money back plan

59.Which among the following cannot be termed as an asset?

I. Car
II. Human Life
III. Air
IV. House
118

60.Which of the below cannot be categorised under risks?

I. Dying too young
II. Dying too early
III. Natural wear and tear
IV. Living with disability

61. Life insurance policies are contracts of indemnity while general insurance
policies are contracts of assurance
II. Life insurance policies are contracts of assurance while general insurance
policies are contracts of indemnity
III. In case of general insurance the risk event protected against is certain
IV. The certainty of risk event in case of general insurance increases with time

62.Which among the following methods is a traditional method that can help
determine the insurance needed by an individual?
I. Human Economic Value
II. Life Term Proposition
III. Human Life Value
IV. Future Life Value

63.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?
I. Young people are mostly dependant
II. Old people can afford to pay more
III. Mortality is related to age
IV. Mortality is inversely related to age

64.Which of the below is not an advantage of cash value insurance contracts?

I. Safe and secure investment
II. Inculcates saving discipline
III. Lower yields
IV. Income tax advantages
65.Which of the below is an advantage of cash value insurance contracts?
I. Returns subject to corroding effect of inflation
II. Low accumulation in earlier years
III. Lower yields
IV. Secure investment

CHAPTER 7
FINANCIAL PLANNING

66.Which among the following would you recommend in order to seek

protection against unforeseen events?
I. Insurance
II. Transactional products like bank FD‟s
III. Shares
IV. Debentures

67.When is the best time to start financial planning?

I. Post retirement
II. As soon as one gets his first salary
III. After marriage
IV. Only after one gets rich

68.Which among the following is not an objective of tax planning?

I. Maximum tax benefit
II. Reduced tax burden as a result of prudent investments
III. Tax evasion
IV. Full advantage of tax breaks

69.An individual with an aggressive risk profile is likely to follow wealth

_______ investment style.
I. Consolidation
II. Gifting
III. Accumulation
IV. Spending

70.Which among the following is a wealth accumulation product?

I. Bank Loans
II. Shares
III. Term Insurance Policy
IV. Savings Bank Account

71.Savings can be considered as a composite of two decisions. Choose them

from the list below.
I. Risk retention and reduced consumption
II. Gifting and accumulation
III. Spending and accumulation
IV. Postponement of consumption and parting with liquidity

72.During which stage of life will an individual appreciate past savings the
most?
I. Post retirement
II. Earner
III. Learner
IV. Just married

73.What is the relation between investment horizon and returns?

I. Both are not related at all
II. Greater the investment horizon the larger the returns
III. Greater the investment horizon the smaller the returns
IV. Greater the investment horizon more tax on the returns

74.Which among the following can be categorised under transactional

products?
I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds

75.Which among the following can be categorised under contingency

products?
I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds

76.Which of the below can be categorised under wealth accumulation

products?
I. Bank deposits
II. Life insurance
III. General insurance
IV. Shares

_77._________ is a rise in the general level of prices of goods and services in

an economy over a period of time.
I. Deflation
II. Inflation
III. Stagflation
IV. Hyperinflation

78.Which of the below is not a strategy to maximise discretionary income?

I. Debt restructuring
II. Loan transfer
III. Investment restructuring
IV. Insurance purchase
 CHAPTER 8
LIFE INSURANCE PRODUCTS –I
79.Which among the following is an intangible product?
I. Car
II. House
III. Life insurance
IV. Soap

80.The premium paid for whole life insurance is _____________ than the
premium paid for term assurance.
I. Higher
II. Lower
III. Equal
IV. Substantially higher

81.___________ life insurance pays off a policyholder's mortgage in the event

of the person's death.
I. Term
II. Mortgage
III. Whole
IV. Endowment

82.The ________ the premium paid by you towards your life insurance, the
________ will be the compensation paid to the beneficiary in the event of your
death.
I. Higher, Higher
II. Lower, Higher
III. Higher, Lower
IV. Faster, Slower

83.Which of the below option is correct with regards to a term insurance

plan?
I. Term insurance plans come with life-long renewability option
II. All term insurance plans come with a built-in disability rider
III. Term insurance can be bought as a stand-alone policy as well as a rider
with another policy
IV. There is no provision in a term insurance plans to convert it into a whole
life insurance plan

84.In decreasing-term insurance, the premiums paid ____________ over time.

I. Increase
II. Decrease
III. Remain constant
IV. Are returned

85.Using the conversion option present in a term policy you can convert the
same to __________.
I. Whole life policy
II. Mortgage policy
III. Bank FD
IV. Decreasing term policy

86.What is the primary purpose of a life insurance product?

I. Tax rebates
II. Safe investment avenue
III. Protection against the loss of economic value of an individual‟s productive
abilities
IV. Wealth accumulation

87.Who among the following is best advised to purchase a term plan?

I. An individual who needs money at the end of insurance term
II. An individual who needs insurance and has a high budget
III. An individual who needs insurance but has a low budget
IV. An individual who needs an insurance product that gives high returns

88.Which of the below statement is incorrect with regards to decreasing term

assurance?
I. Death benefit amount decreases with the term of coverage
II. Premium amount decreases with the term of coverage
III. Premium remains level throughout the term
IV. Mortgage redemption plans are an example of decreasing term assurance
plans

89.Which of the below statement is correct with regards to endowment

assurance plan?
I. It has a death benefit component only
II. It has a survival benefit component only
III. It has both a death benefit as well as a survival component
IV. It is similar to a term plan

90.Which of the below is an example of an endowment assurance plan?

I. Mortgage Redemption Plan
II. Credit Life Insurance Plan
III. Money Back Plan
IV. Whole Life Plan

CHAPTER 9
LIFE INSURANCE PRODUCTS –II
91.Which among the following is a non-traditional life insurance product?
I. Term assurance
II. Universal life insurance
III. Endowment insurance
IV. Whole life insurance

92.Which of the below statement is incorrect?

I. Variable life insurance is a temporary life insurance policy
II. Variable life insurance is a permanent life insurance policy
III. The policy has a cash value account
IV. The policy provides a minimum death benefit guarantee

93.What does inter-temporal allocation of resources refer to?

I. Postponing allocation of resources until the time is right
II. Allocation of resources over time
III. Temporary allocation of resources
IV. Diversification of resource allocation

94.Which among the following is a limitation of traditional life insurance

products?
I. Yields on these policies is high
II. Clear and visible method of arriving at surrender value
III. Well defined cash and savings value component
IV. Rate of return is not easy to ascertain

95.Where was the Universal Life Policy introduced first?

I. USA
II. Great Britain
III. Germany
IV. France

96.Who among the following is most likely to buy variable life insurance?
I. People seeking fixed return
II. People who are risk averse and do not dabble in equity
III. Knowledgeable people comfortable with equity
IV. Young people in general

97.Which of the below statement is true regarding ULIP‟s?

I. Value of the units is determined by a formula fixed in advance
II. Investment risk is borne by the insurer
III. ULIP‟s are opaque with regards to their term, expenses and savings
components
IV. ULIP‟s are bundled products

98.All of the following are characteristics of variable life insurance EXCEPT:

I. Flexible premium payments
II. Cash value is not guaranteed
III. Policy owner selects where savings reserve is invested
IV. Minimum Death benefit is guaranteed

99.Which of the below is correct with regards to universal life insurance?

Statement I: It allows policy owner to vary payments
Statement II: Policy owner can earn market based rate of return on cash value
I. I is true
II. II is true
III. I and II are true
IV. I and II are false

100.All of the following is true regarding ULIP‟s EXCEPT:

I. Unit holder can choose between different kind of funds
II. Life insurer provides guarantee for unit values
III. Units may be purchased by payment of a single premium or via regular
premium payments.
IV. ULIP policy structure is transparent with regards to the insurance expenses
component

101.As per IRDAI norms, an insurance company can provide which of the
below non-traditional savings life insurance products are permitted in India?
Choice I: Unit Linked Insurance Plans
Choice II: Variable Insurance Plans
I. I only
II. II only
III. I and II both
IV. Neither I nor II

102.What does unbundling of life insurance products refers to?

I. Correlation of life insurance products with bonds
II. Correlation of life insurance products with equities
III. Amalgamation of protection and savings element
IV. Separation of the protection and savings element

CHAPTER 10
APPLICATIONS OF LIFEINSURANCE

103.What is the objective behind Mortgage Redemption Insurance?

I. Facilitate cheaper mortgage rates
II. Provide financial protection for home loan borrowers
III. Protect value of the mortgaged property
IV. Evade eviction in case of default

104.The sum assured under keyman insurance policy is generally linked to

which of the following?
I. Keyman income
II. Business profitability
III. Business history
IV. Inflation indeX

105.Mortgage redemption insurance (MRI) can be categorised under ________.

I. Increasing term life assurance
II. Decreasing term life assurance
III. Variable life assurance
IV. Universal life assurance

106.Which of the below losses are covered under keyman insurance?

I. Property theft
II. Losses related to the extended period when a key person is unable to work
III. General liability
IV. Losses caused due to errors and omission

107.A policy is effected under the MWP Act. If the policyholder does not
appoint a special trustee to receive and administer the benefits under the
policy, the sum secured under the policy becomes payable to the
_____________.
I. Next of kin
II. Official Trustee of the State
III. Insurer
IV. Insured

108.Mahesh ran a business on borrowed capital. After his sudden demise, all
the creditors are doing their best to go after Mahesh‟s assets. Which of the
below assets is beyond the reach of the creditors?
I. Property under Mahesh‟s name
II. Mahesh‟s bank accounts
III. Term life insurance policy purchased under Section 6 of MWP Act
IV. Mutual funds owned by Mahesh

109.Which of the below option is true with regards to MWP Act cases?
Statement I: Maturity claims cheques are paid to policyholders
Statement II: Maturity claims cheques are paid to trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true

110.Which of the below option is true with regards to MWP act cases?
Statement I: Death claims are settled in favour of nominees
Statement II: Death claims are settled in favour of trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true
111.Ajay pays insurance premium for his employees. Which of the below
insurance premium will not be treated deductible as compensation paid to
employee?
Choice I: Health insurance with benefits payable to employee
Choice II: Keyman life insurance with benefits payable to Ajay
I. I only
II. II only
III. Both I and II
IV. Neither I nor II

112.The practice of charging interest to borrowers who pledge their property

as collateral but leaving them in possession of the property is called
_____________.
I. Security
II. Mortgage
III. Usury
IV. Hypothecation

113.Which of the below policy can provide protection to home loan

borrowers?
I. Life Insurance
II. Disability Insurance
III. Mortgage Redemption Insurance
IV. General Insurance

CHAPTER 11
PRICING AND VALUATION IN LIFE INSURANCE

114.What does a policy lapse mean?

I. Policyholder completes premium payment for a policy
II. Policyholder discontinues premium payment for a policy
III. Policy attains maturity
IV. Policy is withdrawn from the market

115.Who bears the investment risk in case of ULIPs?

I. Insurer
II. Insured
III. State
IV. IRDA

116.What does the term “premium” denote in relation to an insurance

policy?
I. Profit earned by the insurer
II. Price paid by an insured for purchasing the policy
III. Margins of an insurer on a policy
IV. Expenses incurred by an insurer on a policy

117.Which of the below is not a factor in determining life insurance

premium?
I. Mortality
II. Rebate
III. Reserves
IV. Management expenses

118.What is a policy withdrawal?

I. Discontinuation of premium payment by policyholder
II. Surrender of policy in return for acquired surrender value
III. Policy upgrade
IV. Policy downgrade

119.Which of the below is one of the ways of defining surplus?

I. Excessive liabilities
II. Excessive turnover
III. Excess value of liabilities over assets
IV. Excess value of assets over liabilities

120.Which of the below is not a component of ULIP premiums?

I. Policy allocation charge
II. Investment risk premium
III. Mortality charge
IV. Social security charge

121.Life insurance companies may offer rebate to the buyer on the

premium that is payable on the basis of ___________.
I. Sum assured chosen by the buyer
II. Type of policy chosen by the buyer
III. Term of the plan chosen by the buyer
IV. Mode of payment (cash, cheque, card) chosen by the buyer

121.Interest rates are one of the important components used while

determining the premium. Which of the below statement is correct with
regards to interest rates?
I. Lower the interest rate assumed, lower the premium
II. Higher the interest rate assumed, higher the premium
III. Higher the interest rate assumed, lower the premium
IV. The interest rates don‟t affect premiums

122.Which of the below statement is correct?

I. Business strain is the difficulty faced by the companies in securing new
business
II. Business strain arises at the end of the policy term.
III. Business strain arises because of excess premium
IV. Business strain arises because of excess expenses at the new business
stage .

123.With regards to valuation of assets by insurance companies,

__________ is the value at which the life insurer has purchased or acquired
its assets. 209
I. Discounted future value
II. Discounted present value
III. Market value
IV. Book value

124.In case of __________, a company expresses the bonus as a percentage

of basic benefit and already attached bonuses.
I. Reversionary bonus
II. Compound bonus
III. Terminal bonus
IV. Persistency bonus

CHAPTER 12
DOCUMENTATION –PROPOSAL STAGE

125.During the _________ period, if the policyholder has bought a policy and
does not want it, he / she can return it and get a refund.
I. Free evaluation
II. Free look
III. Cancellation
IV. Free trial

126.Which of the below is an example of standard age proof?

I. Ration card
II. Horoscope
III. Passport
IV. Village Panchayat certificate

127.Which of the below can be attributed to moral hazard?

I. Increased risky behaviour following the purchase of insurance
II. Increased risky behaviour prior to the purchase of insurance
III. Decreased risky behaviour following the purchase of insurance
IV. Engaging in criminal acts post being insured

128.Which of the below features will be checked in a medical examiner‟s

report?
I. Emotional behaviour of the proposer
II. Height, weight and blood pressure
III. Social status
IV. Truthfulness

129.A __________ is a formal legal document used by insurance companies

that provides details about the product.
I. Proposal form
II. Proposal quote
III. Information docket
IV. Prospectus

130.The application document used for making the proposal is commonly

known as the __________.
I. Application form
II. Proposal form
III. Registration form
IV. Subscription form

131.From the below given age proof documents, identify the one which is
classified as non-standard by insurance companies.
I. School certificate
II. Identity card in case of defence personnel
III. Ration card
IV. Certificate of baptism

132.Money laundering is the process of bringing _______ money into an

economy by hiding its _______ origin so that it appears to be legally acquired.
I. Illegal, illegal
II. Legal, legal
III. Illegal, legal
IV. Legal, illegal

133.In case the policyholder is not satisfied with the policy, he / she can
return the policy within the free-look period i.e. within ________of receiving the
policy document.
I. 60 days
II. 45 days
III. 30 days
IV. 15 days

134.Which of the below statement is correct with regards to a policy returned

by a policyholder during the free look period?
I. The insurance company will refund 100% of the premium
II. The insurance company will refund 50% of the premium
III. The insurance company will refund the premium after adjusting for
proportionate risk premium for the period on cover, medical examination
expenses and stamp duty charges
IV. The insurance company will forfeit the entire premium

135.Which of the below is not a valid address proof?

I. PAN Card
II. Voter ID Card
III. Bank passbook
IV. Driving licence

CHAPTER 13
DOCUMENTATION –POLICY CONDITION -I

136.What does a first premium receipt (FPR) signify? Choose the most
appropriate option.
I. Free look period has ended
II. It is evidence that the policy contract has begun
III. Policy cannot be cancelled now
IV. Policy has acquired a certain cash value

137.Which of the following documents is an evidence of the contract between

insurer and insured?
I. Proposal form
II. Policy document
III. Prospectus
IV. Claim form

138.If complex language is used to word a certain policy document and it has
given rise to an ambiguity, how will it generally be construed?
I. In favour of insured
II. In favour of insurer
III. The policy will be declared as void and the insurer will be asked to return
the premium with interest to the insured
IV. The policy will be declared as void and the insurer will be asked to return
the premium to the insured without any interest

139.Select the option that best describes a policy document.

I. It is evidence of the insurance contract
II. It is evidence of the interest expressed by the insured in buying an
insurance policy from the company
III. It is evidence of the policy (procedures) followed by an insurance company
when dealing with channel partners like banks, brokers and other entities
IV. It is an acknowledgement slip issued by the insurance company on
payment of the first premium
140.Which of the below statement is correct?
I. The proposal form acceptance is the evidence that the policy contract has
begun
II. The acceptance of premium is evidence that the policy has begun
III. The First Premium Receipt is the evidence that the policy contract has
begun
IV. The premium quote is evidence that the policy contract has begun

141.For the subsequent premiums received by the insurance company after

the first premium, the company will issue __________.
I. Revival premium receipt
II. Restoration premium receipt
III. Reinstatement premium receipt
IV. Renewal premium receipt

142.What will happen if the insured person loses the original life insurance
policy document?
I. The insurance company will issue a duplicate policy without making any
changes to the contract
II. The insurance contract will come to an end
III. The insurance company will issue a duplicate policy with renewed terms
and conditions based on the current health declarations of the life insured
IV. The insurance company will issue a duplicate policy without making any
changes to the contract, but only after a Court order.

143.Which of the below statement is correct?

I. The policy document has to be signed by a competent authority but need
not be compulsorily stamped according to the Indian Stamp Act.
II. The policy document has to be signed by a competent authority and should
be stamped according to the Indian Stamp Act.
III. The policy document need not be signed by a competent authority but
should be stamped according to the Indian Stamp Act.
IV. The policy document neither needs to be signed by a competent authority
nor it needs to be compulsorily stamped according to the Indian Stamp Act.

144.Which of the below forms the first part of a standard insurance policy
document?
I. Policy schedule
II. Standard provisions
III. Specific policy provisions
IV. Claim procedure

145.In a standard insurance policy document, the standard provisions section

will have information on which of the below?
I. Date of commencement, date of maturity and due date of last premium
II. Name of nominee
III. The rights and privileges and other conditions, which are applicable under
the contract
IV. The signature of the authorised signatory and policy stamp
146.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 policydocument?
I. Policy schedule
II. General provisions
III. Standard provisions
IV. Specific policy provisions

CHAPTER 14
DOCUMENTATION -POLICY CONDITION-II

147.Under what circumstances would the policyholder need to appoint an

appointee?
I. Insured is minor
II. Nominee is a minor
III. Policyholder is not of sound mind
IV. Policyholder is not married

148.Which of the below statement is false with regards to nomination?

I. Policy nomination is not cancelled if the policy is assigned to the insurer in
return for a loan
II. Nomination can be done at the time of policy purchase or subsequently
III. Nomination can be changed by making an endorsement in the policy
IV. A nominee has full rights on the whole of the claim

149.In order for the policy to acquire a guaranteed surrender value, for how
long must the premiums be paid as per law?
I. Premiums must be paid for at least 2 consecutive years
II. Premiums must be paid for at least 3 consecutive years
III. Premiums must be paid for at least 4 consecutive years
IV. Premiums must be paid for at least 5 consecutive years

150.When is a policy deemed to be lapsed?

I. If the premiums are not paid on due date
II. If the premiums are not paid before the due date
III. If the premium has not been paid even during days of grace
IV. If the policy is surrendered

151.Which of the below statement is correct with regards to grace period of

an insurance policy?
I. The standard length of the grace period is one month.
II. The standard length of the grace period is 30 days.
III. The standard length of the grace period is one month or 30 days.
IV. The standard length of the grace period is one month or 31 days.
151.What will happen if the policyholder does not pay the premium by t due
date and dies during the grace period?
I. The insurer will consider the policy void due to non-payment of premium by
the due date and hence reject the claim
II. The insurer will pay the claim and waive off the last unpaid premium
III. The insurer will pay the claim after deducting the unpaid premium
IV. The insurer will pay the claim after deducting the unpaid premium along
with interest which will be taken as 2% above the bank savings interest rate

152.During the revival of a lapsed policy, which of the below aspect is

considered most significant by the insurance company? Choose the most
appropriate option.
I. Evidence of insurability at revival
II. Revival of the policy leading to increase in risk for the insurance company
III. Payment of unpaid premiums with interest
IV. Insured submitting the revival application within a specified time frame

153.For an insurance policy nomination is allowed under _________ of the

Insurance Act, 1938.
I. Section 10
II. Section 38
III. Section 39
IV. Section 45

154.Which of the below statement is incorrect with regards to a policy against

which a loan has been taken from the insurance company?
I. The policy will have to be assigned in favour of the insurance company
II. The nomination of such policy will get cancelled due to assignment of the
policy in favour of the insurance company
III. The nominee‟s right will affected to the extent of the insurer‟s interest in
the policy
IV. The policy loan is usually limited to a percentage of the policy‟s surrender
value

155.Which of the below statement is incorrect with regards to assignment of

an insurance policy?
I. In case of Absolute Assignment, in the event of death of the assignee, the
title of the policy would pass to the estate of the deceased assignee.
II. The assignment of a life insurance policy implies the act of transferring the
rights right, title and interest in the policy (as property) from one person to
another.
III. It is necessary that the policyholder must give notice of assignment to the
insurer.
IV. In case of Absolute Assignment, the policy vests absolutely with the
assignee till maturity, except in case of death of the insured during the policy
tenure, wherein the policy reverts back to the beneficiaries of the insured.

156.Which of the below alteration will be permitted by an insurance

company?
I. Splitting up of the policy into two or more policies
II. Extension of the premium paying term
III. Change of the policy from with profit policy to without profit policy
IV. Increase in the sum assured

CHAPTER 15
UNDERWRITING

157.Which of the following cases is likely to be declined or postponed by a life

insurer?
I. Healthy 18 year old
II. An obese person
III. A person suffering from AIDS
IV. Housewife with no income of her own

158.Which of the following is an example of moral hazard?

I. Stunt artist dies while performing a stunt
II. A person drinking copious amounts of alcohol because he is inured
III. Insured defaulting on premium payments
IV. Proposer lying on policy document

159.Why is heredity history of importance in medical underwriting?

I. Rich parents have healthy kids
II. Certain diseases can be passed on from parents to children
III. Poor parents have malnourished kids
IV. Family environment is a critical factor

160.Which of the following denotes the underwriter‟s role in an insurance

company?
I. Process claims
II. Decide acceptability of risks
III. Product design architect
IV. Customer relations manager

161.Which of the following is not an underwriting decision?

I. Risk acceptance at standard rates
II. Declinature of risk
III. Postponement of risk
IV. Claim rejection

162.Which of the following is not a standard age proof?

I. Passport
II. School leaving certificate
III. Horoscope
IV. Birth certificate

163.Which of the following condition will affect a person‟s insurability

negatively? 272
I. Daily jogs
II. Banned substance abuse
III. Lazy nature
IV. Procrastination

164.Under what method of underwriting does an underwriter assign positive

rating points for all negative or adverse factors (negative points for any
positive or favourablactors)?
I. Judgment
II. Arbitrary
III. Numerical rating
IV. Single step

165.Under risk classification, ___________ consist of those whose anticipated

mortality corresponds to the standard lives represented by the mortality
table.
I. Standard lives
II. Preferred risks
III. Sub-standard lives
IV. Declined lives

166.Amruta is pregnant. She has applied for a term insurance cover. Which of
the below option will be the best option to choose for an underwriter to offer
insurance to Amruta? Choose the most likely option.
I. Acceptance at ordinary rates
II. Acceptance with extra premium
III. Decline the proposal
IV. Acceptance with a restrictive clause

167.Which of the below insurance proposal is not likely to qualify under non-
medical underwriting?
I. Savita, aged 26 years, working in an IT company as a software engineer
II. Mahesh, aged 50 years, working in a coal mine
III. Satish, aged 28 years, working in a bank and has applied for an insurance
cover of Rs. 1 crore
IV. Pravin, aged 30 years, working in a departmental store and has applied for
an endowment insurance plan for a tenure of 10 years

168.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.
I. Judgment method
II. Numerical method
III. Any of the above method since an illness like diabetes does not play a
major role in the underwriting process
IV. Neither of the above method as diabetes cases are rejected outright

169.Santosh has applied for a term insurance policy. His anticipated mortality
is significantly lower than standard lives and hence could be charged a lower
premium. Under risk classification, Santosh will be classified under
___________.
I. Standard lives
II. Preferred risks
III. Substandard lives
IV. Declined lives

CHAPTER 16
PAYMENTS UNDER A LIFE INSURANCE POLICY
170.Which of the below statement best describes the concept of claim?
Choose the most appropriate option.
I. A claim is a request that the insurer should make good the promise
specified in the contract
II. A claim is a demand that the insurer should make good the promise
specified in the contract
III. A claim is a demand that the insured should make good the commitment
specified in the agreement
IV. A claim is a request that the insured should make good the promise
specified in the agreement

171.Given below is a list of policies. Identify under which type of policy, the
claim payment is made in the form of periodic payments?
I. Money-back policy
II. Unit linked insurance policy
III. Return of premium policy
IV. Term insurance policy

172.Mahesh has bought a life insurance policy with a critical illness rider. He
has made absolute assignment of the policy in favour of Karan. Mahesh
suffers a heart attack and there is a claim of Rs. 50,000 under the critical
illness rider. To whom will the payment be made in this case?
I. Mahesh
II. Karan
III. The payment will be shared equally by Mahesh and Karan
IV. Neither of the two because Mahesh has suffered the heart attack but the
policy is assigned in favour of Karan.

173.Praveen died in a car accident. The beneficiary submits documents for

death claim. Which of the below document is an additional document
required to be submitted in case of accidental death as compared to natural
death.
I. Certificate of burial or cremation
II. Treating physician‟s certificate
III. Employer‟s certificate
IV. Inquest Report

174.Which of the below death claim will be treated as an early death claim?
I. If the insured dies within three years of policy duration
II. If the insured dies within five years of policy duration
III. If the insured dies within seven years of policy duration
IV. If the insured dies within ten years of policy duration

175.Given below are some events that will trigger survival claims. Identify
which of the below statement is incorrect?
I. Claim paid on maturity of a term insurance policy
II. An instalment payable upon reaching the milestoe under a money-back
policy
III. Claim paid for critical illnesses covered under the policy as a rider benefit
IV. Surrender value paid on surrender of an endowment policy by the
policyholder

176.A payment made under a money-back policy upon reaching a milestone

will be classified under which type of claim?
I. Death claim
II. Maturity claim
III. Periodical survival claim
IV. Surrender claim

177.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?
I. Lower of sum assured or fund value
II. Higher of sum assured or fund value
III. Premiums paid will be returned with 2% higher interest rate as compared
to a bank‟s savings deposit
IV. Surrender value

178.Based on classification of claims (early or non-early), pick the odd one

out?
I. Ramya dies after 6 months of buying a term insurance plan
II. Manoj dies after one and half years of buying a term insurance plan
III. David dies after two and half years of buying a term insurance plan
IV. Pravin dies after five and half years of buying a term insurance plan

179.Given below is a list of documents to be submitted for a normal death

claim by all beneficiaries in the event of death of life insured. Pick the odd
one out which is additionally required to be submitted only in case of death
by accident.
I. Inquest report
II. Claim form
III. Certificate of burial or cremation
IV. Hospital‟s certificate

180.As per IRDAI (Protection of Policyholders Interests) Regulations, 2002, a

claim under a life policy shall be paid or be disputed, within 30 days from the
date of receipt of all relevant papers and clarifications required.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days

SECTION 3
HEALTH SECTION
CHAPTER 18
INSURANCE DOCUMENTATION

181.As per guidelines, an insurance company has to process an insurance

proposal within __________.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days

182.In case the premium payment is made by cheque, then which of the
below statement will hold true?
I. The risk may be assumed on the date on which the cheque is posted
II. The risk may be assumed on the date on which the cheque is deposited by
the insurance company
III. The risk may be assumed on the date on which the cheque is received by
the insurance company
IV. The risk may be assumed on the date on which the cheque is issued by
the proposer
183.Which of the below statement is correct with regards to a warranty?
I. A warranty is a condition which is implied without being stated in the policy
II. A warranty is a condition expressly stated in the policy
III. A warranty is a condition expressly stated in the policy and communicated
to the insured separately and not as part of the policy document
IV. If a warranty is breached, the claim can still be paid if it is not material to
the risk

184.If certain terms and conditions of the policy need to be modified at the
time of issuance, it is done by setting out the amendments through
__________.
I. Warranty
II. Endorsement
III. Alteration
IV. Modifications are not possible

185.Which of the below statement is correct with regards to renewal notice?

I. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 30 days before the expiry of the policy
II. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 15 days before the expiry of the policy
III. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 7 days before the expiry of the policy
IV. As per regulations there is no legal obligation on insurers to send a
renewal notice to insured before the expiry of the policy

CHAPTER 19
HEALTH INSURANCE PRODUCTS
186.As per IRDA guidelines, a ________ grace period is allowed for renewal of
individual health policies.
I. Fifteen days
II. Thirty days
III. Forty Five days
IV. Sixty days

187.Though the duration of cover for pre-hospitalization expenses would vary

from insurer to insurer and is defined in the policy, the most common cover is
for ________ pre-hospitalization.
I. Fifteen days
II. Thirty days
III. Forty Five days
IV. Sixty days

188.Which of the below statement is correct with regards to a hospitalization

expenses policy?
I. Only hospitalization expenses are covered
II. Hospitalization as well as pre and post hospitalization expenses are
covered
III. Hospitalization as well as pre and post hospitalization expenses are
covered and a lumpsum amount is paid to the family members in the event of
insured‟s death
IV. Hospitalization expenses are covered from the first year and pre and post
hospitalization expenses are covered from the second year if the first year is
claim free.

189.Identify which of the below statement is correct?

I. Health insurance deals with morbidity
II. Health insurance deals with mortality
III. Health insurance deals with morbidity as well as mortality
IV. Health insurance neither deals with morbidity or mortality

190.Which of the below statement is correct with regards to cashless service

provided in health insurance?
I. It is an environment friendly go-green initiative started by insurance
companies to promote electronic payments so that circulation of physical
cash notes can be reduced and trees can be saved.
II. Service is provided free of cost to the insured and no cash is to be paid as
the payment is made by the Government to the insurance company under a
special scheme
III. All payments made by insured have to be made only through internet
banking or cards as cash is not accepted by the insurance company
IV. The insured does not pay and the insurance company settles the bill
directly with the hospital

191.Identify the correct full form of PPN with regards to hospitals in health
insurance.
I. Public Preferred Network
II. Preferred Provider Network
III. Public Private Network
IV. Provider Preferential Network

192.Identify which of the below statement is incorrect?

I. An employer can take a group policy for his employees
II. A bank can take a group policy for its customers
III. A shopkeeper can take a group policy for its customers
IV. A group policy taken by the employer for his employees can be extended
to include the family members of the employees

CHAPTER 20
HEALTH INSURANCE UNDERWRITING
193.Underwriting is the process of ___________.
I. Marketing insurance products
II. Collecting premiums from customers
III. Risk selection and risk pricing
IV. Selling various insurance products
Insurable interest refers to ____________.
I. Financial interest of the person in the asset to be insured
II. The asset which is already insured
III. Each insurer‟s share of loss when more than one company covers the
same loss
IV. The amount of the loss that can be recovered from the insurer

194.Which of the following statements about medical underwriting is

incorrect?
I. It involves high cost in collecting and assessing medical reports.
II. Current health status and age are the key factors in medical underwriting
for health insurance.
III. Proposers have to undergo medical and pathological investigations to
assess their health risk profile.
IV. Percentage assessment is made on each component of the risk.

195.Which of the following factor does not affect the morbidity of an

individual?
I. Gender
II. Spouse job
III. Habits
IV. Residence location

196.According to the principle of indemnity, the insured is paid for __________.

I. The actual losses to the extent of the sum insured
II. The sum insured irrespective of the amount actually spent
III. A fixed amount agreed between both the parties
IV. The actual losses irrespective of the sum assured

197.The first and the primary source of information about an applicant, for
the underwriter is his ________________.
I. Age proof documents
II. Financial documents
III. Previous medical records
IV. Proposal form

198.The underwriting process is completed when ___________________.

I. All the critical information related to the health and personal details of the
proposer are collected through the proposal form
II. All the medical examinations and tests of the proposer are completed
III. The received information is carefully assessed and classified into
appropriate risk categories
IV. The policy is issued to the proposer after risk selection and pricing.
199.Which of the following statements about the numerical rating method is
incorrect?
I. Numerical rating method provides greater speed in the handling of a large
business with the help of trained personnel.
II. Analysis of difficult or doubtful cases is not possible on the basis of
numerical points without medical referees or experts.
III. This method can be used by persons without any specific knowledge of
medical science.
IV. It ensures consistency between the decisions of different underwriters.

CHAPTER 21

HEALTH INSURANCE CLAIMS

200.Who among the following is not a stakeholder in insurance claim

process?
I. Insurance company shareholders
II. Human Resource Department
III. Regulator
IV. TPA

201.Which of the following document is maintained at the hospital detailing

all treatment done to an in-patient?
I. Investigation report
II. Settlement sheet
III. Case paper
IV. Hospital registration certificate

202.The amount of provision made for all claims in the books of the insurer
based on the status of the claims is known as ________.
I. Pooling
II. Provisioning
III. Reserving
IV. Investing

203.________________ are paid upfront by Assistance Company and later

claimed from insurance company.
I. Bail bond cases
II. Personal accident claims
III. Overseas travel insurance claims
IV. Untenable claims

204.Who among the following is considered as primary stakeholder in

insurance claim process?
I. Customers
II. Owners
III. Underwriters
IV. Insurance agents/brokers

205.Girish Saxena‟s insurance claim was denied by insurance company. In

case of a denial, what is the option available to Girish Saxena, apart from the
representation to the insurer?
I. To approach Government
II. To approach legal authorities
III. To approach insurance agent
IV. Nothing could be done in case of case denial

206.During investigation, of a health insurance claim presented by Rajiv

Mehto, insurance company finds that instead of Rajiv Mehto, his brother
Rajesh Mehto had been admitted to hospital for treatment. The policy of Rajiv
Mehto is not a family floater plan. This is an example of ___________fraud.
I. Impersonation
II. Fabrication of documents
III. Exaggeration of expenses
IV. Outpatient treatment converted to in-patient / hospitalization

207.Under which of the following condition, is domiciliary hospitalization is

covered in a heal
th insurance policy?
I. The condition of the patient is such that he/she can be removed to the
Hospital/Nursing Home , but prefer not to
II. The patient cannot be removed to Hospital/Nursing Home for lack of
accommodation therein
III. The treatment can be carried out only in hospital/Nursing home
IV. Duration of hospitalization is exceeding 24 hour
208.Which of the following codes capture the procedures performed to treat
the illness?
I. ICD
II. DCI
III. CPT
IV. PCT

SECTION 4
GENERAL SECTION
CHAPTER 22
PRINCIPLES OF INSURANCE

209.Which among the following cannot be an element in a valid insurance

contract?
I. Offer and acceptance
II. Coercion
III. Consideration
IV. Legality

210.Which one of the following does not represent an insurable risk?

I. Fire
II. Stolen goods
III. Burglary
IV. Loss of goods due to ship capsizing

211.Mr. Pinto contracted pneumonia as a result of lying on wet ground after a

horse riding accident. The pneumonia resulted in death of Mr. Pinto. What is
the proximate cause of the death?
I. Pneumonia
II. Horse
III. Horse riding accident
IV. Bad luck

212.Moral hazard means:

I. Dishonesty or character defects in an individual
II. Honesty and values in an individual
III. Risk of religious beliefs
IV. Hazard of the property to be insured

213.Risk indicates:
I. Fear of unknown
II. Chance of loss
III. Disturbances at public place
IV. Hazard

214.______________ means spreading one‟s investment in different kinds of

assets.
I. Pooling
II. Diversification
III. Gambling
IV. Dynamic risk

215._____________ is not an example of an asset.

I. House
II. Sunlight
III. Plant and machinery
IV. Motor car

_216._____________ is not an example of risk.

I. Damage to car due to accident
II. Damage of cargo due to rain water
III. Damage to car tyre due to wear and tear
IV. Damage to property due to fire

217.Earthquake is an example of:

I. Catastrophic risk
II. Dynamic risk
III. Marginal risk
IV. Speculative risk

218.Select the most appropriate logical equivalence for the statement.

Statement: Insurance cannot protect an asset from loss or damage.
I. True
II. False
III. Partially true
IV. Not necessarily true

219.__________________ means transfer of all rights and remedies, with respect

to the subject matter of insurance, from insured to insurer.
I. Contribution
II. Subrogation
III. Legal hazard
IV. Risk pooling
220.An example of a fact which need not be disclosed unless asked for is
______________ by the insurer.
I. Age of the insured
II. Presence of fire extinguisher
III. Heart ailment
IV. Other insurance details

221________________ is a wrong statement made during negotiation of a

contract.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation

CHAPTER 23
DOCUMENTATION

222.What is the significance of the principle of contribution?

I. It ensures that the insured also contributes a certain portion of the claim
along with the insurer
II. It ensures that all the insured who are a part of the pool, contribute to the
claim made by a participant of the pool, in the proportion of the premium
paid by them
III. It ensures that multiple insurers covering the same subject matter; come
together and contribute the claim amount in proportion to their exposure to
the subject matter
IV. It ensures that the premium is contributed by the insured in equal
installments over the year.

223.As per guidelines, an insurance company has to process an insurance

proposal within __________.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days

224.Which of the below statement is correct with regards to renewal notice?

I. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 30 days before the expiry of the policy
II. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 15 days before the expiry of the policy
III. As per regulations there is a legal obligation on insurers to send a renewal
notice to insured, 7 days before the expiry of the policy
IV. As per regulations there is no legal obligation on insurers to send a
renewal notice to insured before the expiry of the policy

225.__________ is the maximum limit of liability of insurer under the policy

I. Sum insured
II. Premium
III. Surrender value
IV. Amount of loss

226._______________ is the consideration or price paid by insured under a

contract
I. Claim amount
II. Surrender value
III. Maturity amount
IV. Premium

227.A document which provides an evidence of contract of insurance is

called________
I. Policy
II. Cover note
III. Endorsement
IV. Certificate of insurance

228.The duty of disclosure arises

I. Prior to inception of the policy
II. After inception of the policy
III. Prior to inception and continues during the policy
IV. There is no such duty

229.Material fact
I. Is the value of all material covered in a policy
II. Not important for assessing the risk
III. Is important as it influences the decision of the underwriter
IV. Is not important as it has no bearing on the decision of the underwriter

230.Fire proposal seeks to know

I. Process of manufacture
II. Details of material stored
III. Construction of building
IV. All the above

231.Premium cannot be received

I. In cash
II. By cheque
III. By promissory note
IV. By credit card
232.The certificate of Motor Insurance
I. Is not mandatory
II. Has to be kept with self always
III. Has to be kept in the car always
IV. Has to be kept in the bank locker

233.A warranty
I. Is a condition expressly stated in the policy
II. Has to be complied with
III. Both a and b
IV. None of the above

234.Renewal Notice for Motor insurance is issued by

I. The Insured before expiry of the policy
II. The Insurer before expiry of the policy
III. The Insured after expiry of the policy
IV. The Insurer after expiry of the policy

CHAPTER 24
THEORY AND PRACTICE OF PREMIUM RATING
235.Identify the two factors that affect insurance ratemaking.
I. Probability and severity of risk
II. Source and nature of risk
III. Source and timing of risk
IV. Nature and impact of risk

236.What is pure premium?

I. Premium sufficiently big enough to pay for losses only
II. Premium applicable to marginal members of the society
III. Premium after loading for administrative costs
IV. Premium derived from the most recent loss experience period

237.What is expected of an agent when she detects a moral hazard?

I. Continue with the insurance as before
II. Report the same to the insurer
III. Ask for a share in the claims
IV. Turn a blind eye

238.Suggest an insurance scheme for a doctor to protect him from any claims
of negligence against him.
I. Personal accident insurance
II. Liability insurance
III. Marine hull insurance
IV. Health insurance

239._____________ decides whether to accept or not to accept the risk.

I. Assured
II. Underwriter
III. Agent
IV. Surveyor

240._______________ is the price of a given unit of insurance.

I. Rate
II. Premium
III. Sum Assured
IV. Bonus
241.___________ is the maximum amount that an insurance company will
indemnify to someone who files a claim.
I. Sum insured
II. Premium
III. Rider
IV. Benefits

242.______________ is not a source of information for underwriter.

I. Annual accounts of a proposer
II. Pre-acceptance risk survey of the asset
III. Proposal form
IV. Registration certificate of insurer

243.Hazards are:
I. Factors that increase the impact of losses
II. Factors that increases the frequency of loss
III. Factors that increase the impact and severity of losses
IV. Factors that decrease the impact and severity of losses

244.Which of the following is true?

Physical Hazards:
I. Are not important for rate making
II. Cannot be ascertained
III. Can be calculated from the balance sheet
IV. Can be ascertained from information given in a proposal form

245.In motor insurance one of the warranties is:

I. The vehicle should be washed daily
II. The vehicle should not be used for speed testing
III. The vehicle should not be used for carrying luggage for personal use
IV. The vehicle should not be run more than 200 km per day

246.The purpose of deductible clause is to

I. To avoid claim payment
II. To eliminate payment of small claims
III. To harass the policyholder
IV. To increase the premium

247.Installation of sprinkler system in the premises:

I. Increases risk
II. Decreases the risk
III. Neither increases nor decreases risk
IV. Increases risk of hooding

248.Insured‟s declared value in motor insurance includes:

I. Registration
II. Manufacturer‟s cost price
III. Manufacturer‟s selling price
IV. Arbitrary price component

CHAPTER 25
PERSONAL AND RETAIL INSURANCE
249.Which of the below statement is correct with regards to a householder‟s
insurance policy?
I. A named peril policy may be purchased as a less expensive alternative to a
comprehensive coverage policy that tends to offer coverage to most perils.
II. A comprehensive policy that tends to offer coverage to most perils; may be
purchased as a less expensive alternative to a named peril policy.
III. A named peril policy or comprehensive policy comes at the same price.
IV. With regards to a householder‟s policy, only a named peril policy can be
bought and comprehensive policies are not available.

250.Under the shopkeeper policy, the insured may opt for an additional
„Fixed plate glass and sanitary fittings‟ cover. This will cover accidental loss
of damage to which of the following?
I. Fixed plate glass
II. Sanitary fittings
III. Neon signs
IV. All of the above

251.Motor insurance should be taken in whose name?

I. In the name of the vehicle owner whose name is registered with Regional
Transport Authority
II. If the person who will be driving the vehicle is different from the owner,
then in the name of the person who will be driving the vehicle, subject to
approval from Regional Transport Authority
III. In the name of any family member of the vehicle owner, including the
vehicle owner, subject to approval from the Regional Transport Authority
IV. If the person who will be driving the vehicle is different from the owner,
then primary policy should be in the name of the vehicle owner and add-on
cover in the name of the person who will be driving the vehicle.

252.In householder‟s insurance

I. Gold and silver ornaments are covered
II. Content‟s of one‟s shop is covered
III. Cars owned by the family are covered
IV. Parcels sent by post are covered during transit.

253.Householder‟s insurance covers

I. Only the structure of the home
II. Only the Contents of the home
III. Both the structure and contents
IV. Both Structure and contents only when insured is not at home

254.In shop keeper‟s insurance, which of the following are not covered?
I. Machinery breakdown
II. Malicious damage
III. Business interruption
IV. Willful destruction by insured

255.In shop keeper‟s insurance which of the following are usually not covered
I. Money in till/counter at business premises
II. Money in transit from bank to business premises
III. Money in safe at business premises
IV. Money carried by customer to business premises.

256.Shop insurance covers

I. Dishonest acts of employees
II. Dishonest acts of insured
III. Dishonest acts of customers
IV. Dishonest acts of money lenders

CHAPTER 26
COMMERCIAL INSURANCE

257.A fire policy for commercial risks covers the perils of ________
I. Explosion
II. Implosion
III. Both of the above
IV. None of the above

258.A business interruption insurance policy can be taken only in conjunction

with ____________.
I. Standard fire and special perils policy
II. Standard fire and marine policy
III. Standard and special perils policy
IV. Standard Engineering and marine policy

259.The premium for burglary policy depends on ______________.

I. Nature of insured policy
II. Moral hazard of the insured himself
III. Construction and location of the premises
IV. All of the above

260.Which of the below is covered under a money insurance policy?

I. Shortage due to error or omission
II. Loss of cash from one‟s premises due to burglary
III. Loss of money that has been entrusted to other than authorized person
IV. Riot strike and terrorism

261.Fidelity guarantee insurance indemnifies ________________.

I. Employers against the financial loss suffered by them due to fraud or
dishonesty of their employees
II. employees against the financial loss suffered by them due to fraud or
dishonesty of their employer
III. Employees and employers against the financial loss suffered by them due
to fraud or dishonesty of third party
IV. Shareholders against the financial loss suffered by them due to fraud or
dishonesty of the company management

262.In case of a Jeweler‟s Block Policy, damage to property insured when it is

in transit by registered parcel will be covered under ____________.
I. Section I
II. Section II
III. Section III
IV. Section IV

263.Delay in start-up policy is also known as ______________.

I. Machinery Loss of Profits cover
II. Advance Loss of Profits cover
III. Contractors All Risk cover
IV. Contractors Plant & Machinery cover

264.Which of the following is not covered under Industrial All Risks insurance?
I. Fire and special perils as per fire insurance practice
II. Larceny
III. Machinery breakdown
IV. Electronic equipment

265.Which branch of insurance offers cover against war perils?

I. Marine policies
II. Aviation policies
III. Both of the above
IV. None of the above

266.Under the Public Liability Insurance Act, 1991, how much is the
compensation payable for actual medical expenses?
I. Rs. 6,250
II. Rs, 12,500
III. Rs. 25,000
IV. Rs. 50,000

267.In Engineering insurance CAR stands for

I. Motor Car
II. Contractors All Risks
III. Company‟s All Risks
IV. Companies All Requirements

268.An employer insures himself from dishonest act of his employees by

_________
I. Employees compensation policy
II. Public Liability Insurance policy
III. Fidelity Guarantee Insurance policy
IV. Declaration policy.

269._________ refers to the body of the ship.

I. Hull
II. Cargo
III. Piracy
IV. Jettison

270.Policy which covers loss or damage to aircraft is ______________.

I. Statutory liability
II. Property insurance
III. Aviation insurance
IV. Money insurance

271.Fire Insurance Policy does not cover damage to property even as add-on
cover due to___________.
I. Floods
II. Earthquake
III. Fire
IV. Bombing due to war

272.Consequential Loss (Fire Policy) covers:

I. Loss of profit due to damage to factory
II. Loss of Goodwill
III. Material wear & tear in machinery
IV. Losses due to foreign exchange fluctuations

273.Premium in Burglary depends on:

I. Security measures
II. Location of Premises
III. Nature of property
IV. All of the above

274.ontractor‟s All Risk Policy is a variation of:

I. Fire Insurance
II. Life Insurance
III. Engineering Insurance
IV. Marine Insurance

275.Employee‟s Compensation Policy is a type of

I. Liability Insurance
II. Fire Insurance
III. Marine Cargo Insurance
IV. Engineering Insurance

276.Money Insurance Policy covers:

I. Cash in hand
II. Money invested in Mutual Fund
III. Money lying in Saving Bank
IV. Money deposited with post office.

CHAPTER 27
CLAIMS PROCEDURE

277.Which of the following activities would not be categorised under

professional settlement of claims?
I. Seeking information relating to the cause of the loss
II. Approaching the claim with a prejudice
III. Ascertaining whether the loss was a result of an insured peril
IV. Quantifying the amount payable under the claim

278.Raj is involved in a car accident. His car is insured under a motor

insurance policy. Which among the following is the most appropriate thing for
Raj to do?
I. Notify the insurer of the loss as soon as reasonably possible
II. Notify the insurer at the time of insurance renewal
III. Damage the car further so as to receive a bigger compensation
IV. Ignore the damage
279.Compare claims investigation and claims assessment.
I. Both claims investigation and assessment are the same thing
II. Investigation tries to determine the validity of the claim whereas
assessment is more concerned with the cause and extent of the loss
III. Assessment tries to determine the validity of the claim whereas
investigation is more concerned with the cause and extent of the loss
IV. Investigation is done before the claim is paid and assessment is done after
the claim is paid

280.Who is the licensing authority for surveyors

I. Surveyor Association of India
II. Surveyor Regulatory and Development Authority
III. Insurance Regulatory and Development Authority of India
IV. Government of India

281.Which among the following documents is most likely to be requested

while examining a cyclone damage claim?
I. Coroner‟s report
II. Report from Fire Brigade
III. Police report
IV. Report from Meteorological Department

282.Under which principle can the insurer assume the rights of the insured in
order to recover from a third party the loss paid under a policy?
I. Contribution
II. Discharge
III. Subrogation
IV. Indemnity

283.If the insurer decides that a certain loss is not payable because it is not
covered under the policy then who decides on such matters?
I. Insurer‟s decision is final
II. Umpire
III. Arbitrator
IV. Court of Law

284.Intimation of loss is to be made:

I. at the exact time of the loss
II. after 15 days
III. as soon as reasonably possible
IV. any time after the loss

285.Investigation of loss is done by:

I. unlicensed surveyor
II. licensed and qualified surveyor
III. insured‟s representative
IV. any person with a degree in engineering
286.For personal accident claims, report of________ is necessary.
I. Surveyor
II. Doctor
III. Police
IV. Coroner

287.Independent surveyors are required for claims equal to or above_______

as per the Insurance Act.
I. Rs. 40,000
II. Rs. 15,000
III. Rs. 20,000
IV. Rs. 25,000

288.Claims assessed outside the country in case of travel insurance polices

are assessed by:
I. Indian surveyors
II. Local surveyors in the country of loss
III. Insurer‟s own employees
IV. Claims settling agents named in the policy

289.In case of a fire claim, a report from the fire brigade:

I. is not required
II. is optional for the insured
III. is necessary
IV. is part of the police report

289.What is TAT?
I. Time and Turn
II. Till a Time
III. Time and Tide
IV. Turnaround Time

290.On payment of loss, salvage belongs to:

I. Surveyors
II. Insured
III. Insurer
IV. Local authorities

300.Arbitration is a claim settlement process done ______________.

I. in the court of law
II. by a group of surveyors
III. by arbitrator(s) chosen by the parties involved
IV. arbitrarily by the insurance company‟s employees

301.Insurers under right of subrogation are allowed to recover the loss paid
from:
I. Shipping companies only
II. Railways and road carriers only
III. Airlines and Port Trusts only
IV. Shipping companies and railway and road carriers and airlines and port
trusts