Mock Test - 1

Instructionstocandidates a) b) c) d) Therearefouralternativesforeachquestion Ticktheanswerwhichyoufeelisclosesttothecorrectanswer EachQuestioncarriesonemark Negativemarkingtotheextentof20%isapplicablei.e.foreverywrongansweryouwilllose0.2marks.

Questions
1. Riskswhichinvolvefinanciallyquantifiablelossaretermedas a) Monetaryrisk b) Speculativerisk c) Financialrisk d) Personalrisk Pureriskinvolves a) Gain b) lossornoloss c) lossandgain d) alltheabove Whattypesofrisksareinsurable? a) Speculativerisk b) purerisk c) Gamblingrisk d) Alltheabove Speculativeriskinvolvesthepossibilityof a) Lossonly b) gainonly c) lossorgain d) noneoftheabove Whatarethecomponentsofpersonalrisksthatarefacedbyindividuals? a) death b) disability c) medical d) alltheabove Arrangethestepsofriskmanagementinthelogicalorder 0) Chooseandimplementanappropriatestrategy 1) Analyseandevaluaterisks 2) Monitorthestrategy:reviewandupdateasnecessary 3) Identifytherisks 4) Developalternativesforhandlingrisks a) b) c) d) 40312 31402 31420 34102

2.

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7.

Risksfacedbyanindividualdependonthefollowingmajorstagesoflifecycle a) Youngadult b) youngwithfamily c) middleages d) preretiree/retiree e) alltheabove Generallyininsurancetherisksareseparatedinfollowingcategories a) Personalandpropertyandliabilityrisks b) Privateandofficialrisks c) alltheabove ___________seektoreduceoreliminatethechanceofoccurrenceofloss. a) controlmeasures b) costmeasures c) administrativemeasures d) noneoftheabove Theremustbeasufficientlylargenumberof___________exposureunitstomakethelossesreasonably predictable a) Heterogeneous b) mixed c) homogeneous d) Alltheabove Tobeinsurablethelossproducedbytheriskmustbe________and_________ a) Indefinite,measurable b) definite,measurable c) vague,calculable d) noneoftheabove Aninsurablelossmustbe______________ a) certaintohappen c) indefinite Alosstobeinsurable,mustnotbe a) catastrophic c) definite Theinsuranceprincipleisbasedon___________ a) sharingofresources c) sharingofcapital

8.

9.

10.

11.

12.

b) fortuitousoraccidental d) impossibletohappen

13.

b) fortuitousoraccidental d) noneoftheabove

14.

b) sharingoflosses d) noneoftheabove

15.

Damagethatresultsfromenemyattackwouldbe_____________innature a) catastrophic b) calamity c) provisional d) negligible Whatisthedirectadvantageofinsurance? a) Indemnificationforunexpectedlosses c) safetyoffunds

16.

b) Indemnificationforexpectedprofits d) eliminationofchanceofoccurrenceofinsuredrisk

17.

Whatarethedisadvantagesofinsurancemechanism? a) reductionofuncertainty b) operatingexpenses&moralhazard c) capitalgain&financialrisk d) noneoftheabove Risksmustbe__________beforetheycanbe_________ a) severe,assessed b) identified,measured c) measured,identified d) noneoftheabove Towhomtheprinciplesofriskmanagementareapplicable?

18.

19.

a) Individuals c) hugecommercialenterprises 20.

b) Smallenterprises d) alltheabove

Whicharethetwoelementsinvolvedinevaluationofrisks? a) Probabilitiesoflossproducingeventsoccurringandpotentiallosses b) Probabilitiesofoccurrenceofevents c) Probabilityofrisinginflationonfutureincomeandcostofassets d) Probabilityofincreasingcostofoperationandemployment Riskcontrolmeans a) Anticipation,ascertainingandincreasingthechancesofoccurrenceoflossproducingeventsorlimitingthe severityoflossesthatdohappen b) Avoiding,eliminatingandreducingthechancesofoccurrenceofallevents c) avoiding,eliminatingandreducingthechancesofoccurrenceoflossproducingeventsorlimitingtheseverityof lossesthatdohappen d) Noneoftheabove Thedemandforinsuranceis a) Highlyelastic c) relativelyelastic

21.

22.

b) Relativelyfixed d) noneoftheabove

23.

Incaseofinsurancewhoshouldnormallymaketheoffer? a) agent b) insurer c) prospectivebuyer d) anyone Whatisthebindingforceofanycontract? a) offer c) parties

24.

b) acceptance d) consideration

25.

Whatisconsiderationthatinsurermakesunderinsurancecontract? a) promisetocompensateincaseofinsuredcontingency b) promisetopayincaseofanyevent c) promisetopayondemand d) promisetopaythepremiums Thepartiestoaninsurancecontactare: a) Insurancecompany&minor b) Insurancecompanyanditsagent c) Insuranceagentandtheinsuredclient d) Registeredinsurerandtheinsured(individualorfirm)whoiscompetenttocontract Whichinsurancecontractsarenotcontractsofindemnity? a) Fire b) Marine c) LifeInsurance d) Motor Inpropertyinsuranceatwhattimeinsurableinterestshouldexist? a) Atthetimeofenteringcontract b) atthetimeoflossoccurring c) Notnecessaryatanytime d) bothatthetimeofenteringintothecontract&atthetimeoflossoccurring Whichofthefollowingrelationshipsdoesnotsatisfyinsurableinterestrequirementunderlife insurancecontract? a) Husbandandwife b) Parentchild c) friends d) employerandemployee

26.

27.

28.

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30.

Whileexercisingsubrogationrighthowmuchamountcantheinsurerrecover a) Notmorethan1lakh b) Equivalenttothatamounthehadpaidasclaim c) Equivalenttosuminsured d) 20%ofsuminsured

31.

Materialfacthasbeendefinedas a) Afactthatwouldinfluencethemindofinsured b) Afactthatwouldinfluencethemindofunderwriterindecidingtheacceptanceoftherisk c) Afactthatwouldinfluencethemindofotherpolicyholders d) Afactthatwouldnotaffecttheinsurancecontract Theproposermustdisclosetotheinsurer_____________ a) Allmaterialfacts b) Onlythosespecificallyaskedbytheinsurer c) Personaldetails d) Officedetails Underfireinsurancefollowingisanexampleofmaterialfact a) Previousmedicalhistoryontheinsured b) Natureoftreatmenttaken c) Typeofconstructionofthepropertyanditsuse d) Alltheabove UnderLifeinsurancefollowingisanexampleofmaterialfact a) Occupation,healthandhabitsofthepersontobeinsured b) Particularpossessionsoftheperson c) Particularsaboutthevehicleowned d) noneoftheabove. Awarrantyininsurancecontractsare a) Guarantee b) Stipulationsimposedbyinsurerbecausehewantstoensurethattheriskremainssamethroughoutthecontract anddoesnotincrease c) Guaranteestoincreasetheriskincaseofdefaultonpartofinsurer d) Guaranteetopaythelosstotheinsurerincaseofthelossbeinghigherthanthesuminsured. Breachofutmostgoodfaithgivestheaggrievedparty a) therighttoavoidthecontract b) therighttohonourthecontract c) therighttonondisclosureofbreach d) Noneoftheabove Whatareusedwhenthetermsofinsurancecontractsaretobealtered? a) deductibles b) endorsements c) olicies d) alltheabove

32.

33.

34.

35.

36.

37. 38.

__________aretheprovisionsunderinsurancecontractsthatstipulatedeductionofaprespecified amountfromtheclaimspayableunderthepolicy a) endorsement b) rules c) deductibles d) noneoftheabove .___________isacompulsorydeductiblefromeachandeveryclaimthattheinsurerpaystothe insured a) premiums b) excess c) premiumsandexcess Primarilyhowmanykindsofdeductiblesexist? a) 8 b) 3 c) 4 d) 15

39

40. 41. 42. 43.

Deductiblethatisvoluntaryonthepartofinsuredforapossiblediscountinthepremiumiscalledas a) compulsoryexcess b) excess c) voluntaryexcess d) noneoftheabove Thesharingofinsurancebytwoormoreinsurersinsomeagreedproportioniscalledas a) mixedinsurance b) bancassurance c) coinsurance d) reinsurance Incoinsurancetheclaimsunderpolicyaresharedby a) allinsurersinthesameproportionastheirsharebearstothetotalvalueinsured b) Insuredandinsurers c) Totalvalueinsuredwillbepaidbymaininsurer

d) Maininsurerandtheinsured 44. Reinsuranceis a) Distributionofinsurancebusinessmadebytheinsured b) Anagreementconcludedbyoneinsurerwithanother c) Theothernamegiventocoinsurance d) Theactionoftheinsuredingettingthesameriskinsuredbyanotherinsurer Whataretheareasoflawunderwhichlegalliabilityrisksmayarise? a) Understatute b) undercontract c) atcommonlaw d) allthreegivenabove

45. 46. 47.

Whatistort? a) Hobby b) civilwrong c) disease d) selfinflictedinjury Whatarethetypesofdamagesawardedincaseofpersonalinjuryclaims a) Specialdamagesandgeneraldamages b) Specialdamagesonly c) Damagestothirdpartiesonly d) Noneoftheabove Theliabilitythatarisesbecauseoffailureofonepartynotfulfillingtheprovisionsofcontractwhich ithadenteredintowithanotherpartyiscalled a) Vicariousliability b) Specialdamage c) Contractualliability d) strictliability NametheeconomistwhodevelopedtheconceptofHumanLifeValue a) LordJ.M.Keynes b) Prof.S.S.Huebner c) Prof.J.R.Hicks HowthefamilyisconsideredinHLVpattern? a) SocialUnit b) Dependencyunit LifeInsurancecanbetreatedas a) Totallosscover c) Substituteforlossofincome Anindividualseconomicvalueismeantfor a) Self c) Family(economicunit) HLVexplainsingeneral a) Totalincomeofanindividual c) Earningcapacity c) Economicunit b) Indemnitycover d) Alltheabove b) Self+dependents d) Onlydependents b) Totalwealthofanindividual d) Noneoftheabove

48.

49. 50. 51.

52.

53.

54.

TotalHLVisequalto a) Totalsavings b) Totalinvestment c) Wealth(Assets)+Estimatedfutureeconomicvalueofanindividualtohisfamily. d) Pastincome Theeconomicvaluetoanindividualsfamilyisrepresentedby a) Totalearnings b) Totalexpenditure c) Surplusgeneratedoutofincome. CorporateHLVcanbeabasefor a) Capitalredemptioninsurance c) Employeegroupinsurance b) Keymaninsurance d) Noneoftheabove

55. 56.

57.

TheconceptofHLVprovidesaguidelinetoarriveat a) Affordableinsurance b) Adequateinsurancecover c) Covertosatisfyspecificneeds d) Alltheabove Thepyramidicalhierarchyofhumanneedsispresentedby a) EdwardDbono b) Maslow c) NapoleanHill Needanalysisbasicallyinvolves a) Needsequencing b) Needsexplaining c) Needsprioritisation d) S.S.Huebener d) Noneoftheabove

58. 59.

60.

61.

CalculateHLVtorecommendadequateinsurancecover:Mr.Ritesh,age30retirementage60.HisisAsst.Vice President (Tech.) with Global Cosmetic Limited Present monthly salary Rs. 55,000 approximately. He pays ProfessionaltaxofRs.3000andincometaxsubjecttoallowabledeductionsi.e.taxpaidRs.1,32,000.Reasonableself maintenanceexpenditureestimatedRs.45,000p.a.;LifeInsurancepremiumforselfRs.18,000withtotalsum assuredRs.12,00,000.ForwifeandchildhepaysinsurancepremiumofRs.10,500and6,500respectively.Rateof interestassumedforcapitalisationoffutureincomeisat8%.Adequateadditionalinsurancerecommendedwillbe a) Rs.50lakhs b) Rs.42lakhs c) Rs.55lakhs d) Rs.1Crore CalculatetheHLVtorecommendtotalinsurancecoverMr.Apte,ManagingDirector,HindustanTyresLimited. Hispresentage45.Asperboardresolutionhisretirementageisfixedatage70.HehasatotalincomeofRs. 21,00,000( salaries 15 lakhs, dividends onindividual shares 2.5 lakhs, HUF co parsner profit share 1.5 lakhs, interest on bank deposit and other investment 1 lakh , minor daughters income added 1 lakh) He has paid followingtaxes:Corporateprofessionaltax5,000;Incometax4,10,000asperhisindividualtaxreturnfiled.He pays total life insurance premium of Rs. 55,000 (self insurance cover S.A. 22,00,000); Reasonable maintenance chargeforapersonofhisstatureisassumedasRs.1,00,000p.a.appliedrateofinteresttoarriveatapresentvalue ofhisfutureincomeisat5% a) Rs.2.26Crores b) Rs.3Crores c) Rs.1.80Crores d) Rs.12Crores Mr.RajeevanelectronicsengineerappliesforabankloantolaunchhisownventurebudgetedofRs.1crore.The bankapprovestheloanwithaconditionalhypothecationmarginof+25%anddirectsMr.Rajeevtohypothecatethe lifepolicyasacollateralsecurityformortgageredemptionwhatwillbethesumassuredofthepolicy. a) Rs.75lakhs b) Rs.80lakhs c) Rs.1.25crore d) Rs.2Crores UnderwhoseChairmanshipthecommitteeonInsuranceReformswasconstituted? a) Dr.ManmohanSingh b) P.Chidambaram c) R.N.Malhotra d) BimalJalan WiththepassageofIRDAAct1999theInsuranceAct1938stands______partially a) Repealed b) Amended c) Modified d) Dropped Thereare_________fulltimemembersofIRDAexcludingtheChairperson a) 9 b) 7 c) 5 MaximumagelimitforIRDAChairmanis_______ a) 60 b) 65 c) 62 d) 12 d) 70 d) 20

62.

63. 64. 65. 66. 67. 68. 69.

InsuranceAdvisoryCommitteehasatotalmembershipof______ a) 30 b) 25 c) 22

Section______ofInsuranceAct1938containstheprovisioninregardtoappointmentofagents a) Section41 b) Section49 c) Section42 d) Section45 Withthepassageof______Brokersentryintheinsurancemarkethasbeenmadepossible a) IRDAAct1999 b) IRDA(LicensingofInsuranceAgents)Regulations,2000 c) Insurance(Amendment)bill2002 d) L.I.C.Act Aprospectseekinganappointmentasagenttooperateinanareawithapopulationexceeding5000willhave minimumqualificationsequivalentto a) 8thstandardpassed b) 10thstandardpassed c) 12thstandardpassed Anapplicantforlifeinsuranceorgeneralinsuranceagencyhastoundergotheprescribedprerecruitmenttraining courseforaperiodof a) 80hours b) 50hours c) 100hours d) 150hours Alicencetoactasanagentisvalidforaperiodof a) 5years b) 3years ABrokeris a) Attachedtothecompany b) c) Anindependentintermediary c) 10years d) 2years

70.

71.

72. 73.

Employedbycompany d) Representativeofagroupofcompanies

74.

Theprospectingagentwillhavetopasstheprerecruitmenttestconductedby a) IRDA b) InsuranceCompany c) InsuranceInstituteofIndia(approvedexaminingbody)

d) ActuarialSocietyofIndia 75. Asperthedraftregulationstheprospectivebrokerswillhavetoundergotheprescribedtrainingtobeconducted by a) CollegeofInsurance b) NationalInsuranceAcademy c) ActuarialSocietyofIndia d) InsuranceInstituteofIndia ThefeechargedbyIRDAforgranting/renewalofagentslicenceis a) Rs.250 b) Rs.750 c) Rs.1000 d) Rs.500

76.

77. 78. 79. 80.

81.

82.

83.

84. 85.

86.

87.

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89.

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91. 92.

BeforegrantingthelicencetobrokerstheIRDAwillensure a) Capitaladequacy b) Capitalliquidity c) Assetvalue d) Personalstanding Thebrokerwillhavetomaintaintheprescribed a) Liquiditymargin b) Cashmargin c) SolvencyMargin d) ashbalance Thereare________categoriesofbrokersproposedinthedraftregulations a) 3 b) 4 c) 5 d) 6 Abrokerhastonecessarilyhavewhichofthefollowingtocontinuetoactasabroker a) Bankguarantee b) Bankdeposit c) Professionalindemnityinsurance d) Bankbalance Holder of a Life insurance policy has been allowed a cooling period of _______ under IRDA (Protection of PolicyholdersInterests)Regulations a) 7days b) 15days c) 30days d) 10days Fordelayinprocessinglifeinsuranceclaimtheinsurerwillhavetopayinterestattherate______overandabove thebankrateasatthebeginningoftheyear a) 4% b) 5% c) 2% d) 1% TheprovisionregardingsupplyofcopyoftheproposalformsubmittedbytheinsuredtohimundertheIRDA (ProtectionofPolicyholdersinterest)Regulationscameintoeffectfrom a) 1.4.2002 b) 1.10.2002 c) 1.11.2002 d) 1.9.2002 Theprohibitionofrebateisregulatedaspersection_____ofInsuranceAct1938 a) Section41 b) Section47 c) Section43 d) Section45 Nondisclosureofmaterialfactsbyalifeassuredhasbeendealtwithinwhichofthefollowingsectionsofthe InsuranceAct,1938. a) Section64 b) Section44 c) Section45 d) Section39 Insurerisrequiredtohandoveracopyoftheproposalformtotheinsuredwithin_____daysoftheacceptanceof theproposal a) 7days b) 30days c) 15days d) 10days Aclaimunderalifepolicyshallbepaidordisputedwithin_____daysfromthedateofreceiptofall therelevantpapers. a) 30days b) 45days c) 60days d) 15days Tokeepthelicenceinforcethecompositebrokershallhavetopayregistrationfeescalculatedatthe rateof_____perannum. a) Rs.2lakhs b) Rs.3lakhs c) Rs.25,000 d) Rs.50,000 A compositebrokeristhatbrokerwhocarriesonbusinessas____________ a) Brokerandagent b) Generalandlifeinsurancebroker c) Insuranceandreinsurancebroker BeforeissuingalicencetoabrokertheIRDAwillensurethat,thereareminimum______persons employedhavingprescribedbasicqualificationsandexperienceincarryingoutbrokersbusiness a) 4 b) 2 c) 3 d) 5 TheCooperativesareallowedtocarryonagencybusinessas a) Associateagents b) Institutionalagents c) Corporateagents d) Chiefagents Thefactfinderforcollectingclientinformationisprovidedinwhichofthefollowingregulations: a) IRDA(ProtectionofPolicyholdersinterest)Regulations b) Noregulationsprescribethemasofnow c) IRDA(LicensingofInsuranceAgents)Regulations d) IRDAact1999

93. 94.

95. 96.

InIndiatheagebracketinwhichmaximumdeathsoccuris: a) 70yearsandover b) 5069years c) 2049years d) Lessthan20years LifeexpectancyhasbeenincreasinginIndiasince1921.Thereasonsforthisare a) Betterhealthcarefacilities b) Improveddietarystandards c) Saferbirthpractices d) Alltheabove. Whichofthesefactorsisnotconsideredbytheinsurersindeterminingthepremiumrates? a) Age b) Financialstatus c) Gender d) Smokingstatus Whiletakinganinsurancewhowillnotfallinthecategoryofdependent? a) ASpouseorpartner b) Children c) Relative d) Noneoftheabove. Whatarethevariousstagesoflifethatarerequiredtobestudiedtounderstandtheinsuranceneedsofaperson? a) Youngadult b) Youngfamily c) Over40s d) Maturedcouple e) Alloftheabove Whichofthefollowinginsurancesmayberequiredbyayoungadult? a) Automobileinsurance b) Householdersinsurance c) Personalprotectioninsurance d) Alloftheabove. Provisionwillusuallynotbemadetocoverwhichofthesecostsforamaturecouple a) Illnesses/diseaseforself b) Healthcostsforthesmallchildren c) Incomeprotectionforself d) Property ForHouseandcontentsinsurancewhichinformationwillnotbeofanyrelevancetotheinsurers? a) Typeofconstructionofpremises b) Extentofburglaryprotectionmeasures c) Detailsofitemsofvaluablenature d) Noneoftheabove. WhichofthefollowingisnotaLiabilityexposure? a) BodilyinjuryPropertydamage c) Selfinjuryinanaccident d) b) Professionalnegligenceingivingadvice Injuriestoemployees

97.

98.

99.

100.

101.

102.

ThecodeofconductforinsuranceagentsinIndiahasbeenprovidedinwhichofthefollowingregulations? a) IRDAAct1999 b) IRDA(LicencingofInsuranceAgents)Regulations c) IRDA(ProtectionofPolicyholdersInterest)Regulations d) Noneoftheabove. Terminsurancepolicyprovidesfor a) sumassuredinthecaseofdeath c) onlypremiumpaidtillthedateofdeath b) sumassuredplusbonusinthecaseofdeath d) noneoftheabove.

103.

104.

UnderterminalillnessbenefitsoftheTermInsuranceplanstheterminalillnesshasbeendefinedasapersonwhois likelytodieoutofanillnesswithinaperiodof a) Onemonth b) Threemonths c) Sixmonths d) Ninemonths Whichofthefollowingisnotaclassificationofterminsurancepolicy a) Onlypremiumreturnterminsurance b) Levelbenefittermassurance c) Increasingbenefittermassurance d) Decreasingbenefittermassurance. Whichoftheseisnotaneventunderwhichthesuminsuredcanbeincreasedinalifeinsurancepolicyunder Specialsuminsuredincreasefeature a) Oninsuredgettingmarried b) Oninsuredswillingness c) Oninsuredgettinganincreaseinthesalaryofsizeableamount d) Onthebirthoradoptionofachildbyinsured. Conversionoptionoflifeinsurancepoliciesrefersto a) Conversionofthesumassured c) Conversionoftermsandconditionsofapolicy b) Conversionofapolicyintoadifferentpolicy d) Noneoftheabove.

105.

106.

107.

108.

Whatismeantbyaparticipantwholelifepolicy? a) Theinsuredwillparticipateintheboardoftheinsurancecompany

b) Insuredwillparticipateinthedaytodayrunningoftheinsurancecompany c) InsuredwillparticipateintheprofitsoftheCompany. d) None 109. Endowmentinsurancepoliciesarethepolicies,whichpay a) premiumpaidonlyondeathb) premiumpaidondeathorsurvival c) assuredbenefitsonlyondeath d) assuredbenefitsondeathorsurvival

110.

Homeloan/mortgageprotectioninsurancerefersto a) Propertyinsurancepolicy b) Creditinsurancepolicy c) Lifeinsurancepolicyguaranteeingthemortgageloan d) Noneoftheabove. Educationallifeinsurancepolicesdonotprovide a) Educationtotheinsuredpersonschildrenuptoacertainage. b) Paymentofeducationalexpensesatafuturetime c) Continuededucationalsupporttoinsuredschildrenincaseofhisdeath d) Alltheabove

111.

112.Coolingoffprovisionininsurancepoliciesrefersto a) theperiodduringwhichinsuredcanelecttocancelthepolicyandreceiverefundofpremium b) theperiodduringwhichinsurancecompanycoolsofi.e.stopsoperations. c) theperiodduringwhichtheinsuredsdonothavetopaypremiums. d) Noneoftheabove. 113. PersonalaccidentinsurancepoliciesinIndiadonotcover a) permanenttotaldisablementb) permanentpartialdisablement c) temporarypartialdisablement d) temporarytotaldisablement Disabilityinsurancedoesnotprovideinsurancefor a) sicknessinduceddisabilities c) hereditaryinduceddisabilities b) accidentinduceddisabilities d) noneoftheabove

114.

115.

Suminsuredunderpersonalaccidentinsuranceisrelatedto a) ageoftheinsured b) incomeoftheinsured c) familysizeoftheinsured d) personalhabitsoftheinsured Criticalillnessinsuranceprovides a) hospitalexpensecoverformajorillnesses c) longtermcareaftermajorillnesses b) assuredbenefitsformajorillnesses d) Alloftheabove

116.

117.

Incomeprotectioninsuranceprovidesincomeprotectionincaseof a) lossofincomeoftheinsuredduetoabusinessloos b) lossofincomeofthefamilyduetoinsuredsdeath c) lossofincomeduetoinsuredsdisabilityorsickness d) lossofincomefollowingunemploymentoftheinsured. WhichofthehealthinsurancecoversisnotavailableinIndia? a) Hospitalisationexpenseinsurance b) Longtermcareinsurance c) Unbornchilddisabilityinsurance d) Overseasmedicalexpensesinsurance Whatexpensesaregenerallynotcoveredbyhospitalisationexpensesinsurancepolicy? a) preandposthospitalisationexpenses b) outpatienttreatmentexpenses c) hospitalisationexpensesfollowinganaccidentalinjury

118.

119.

d) Noneoftheabove. 120. TheCumulativeBonusfeatureofmediclaiminsurancerefersto a) reductioninpremium b) freehealthcheckup c) abonusincreaseinthesuminsured d) Noneoftheabove. WhichsectionofIncomeTaxAct1961providestaxbenefitforthemediclaimpremium? a) Section88, b) Section88(L) c) Section80(D) d) Noneoftheabove. JanArogyaBimaPolicyisa a) Hospitalisationexpenseinsuranceforthepoor c) Providentmedicalinsuranceforthepoor IninsuranceparlanceTPAmeans a) ThirdPartyAssessor c) ThirdPartyAdministrator b) Criticalillnessinsuranceforthepoor d) Overseasmedicalinsuranceforthepoor

121.

122.

123.

b) ThirdPartyAdjustor d) Totalpremiumamount.

124.

Thefirststepinreviewoftheinsuranceprogramofaclientbyaplanneris a) Tofindouttheinsuranceneedsoftheclient b) Toascertaintheliabilitiesoftheclient c) Toestablishthefrequencywithwhichareviewwillbemadeoftheclientsprogram d) Tocontacttheclienttoascertainthechangesinhisneeds Thereviewoftheclientsprogramshouldendwith a) Settingofatimeforfuturereviewmeetingwiththeclient b) Implementingoftherevisedprogram c) Arrivingatarevisedprogramafterconsultingwiththeclient d) Discussingwiththeclienttheneedforreviewoftheprogram Whileconductingthereviewoftheinsuranceprogramoftheclient,theplannershould a) Indicatetotheclientintheinsurerhasintroducedanynewproductwhichwillmeettheclientsneedsbetter thantheexistingone b) Bringtothenoticeoftheclienttheneedforadditionalcovertobepurchasedforthechangedneeds orcircumstances c) Keeptheclientinformedoftherisksfacedbyhimwhicharenotcoveredbytheinsuranceprogram d) Alloftheabove Theclaimsarisingoutofthelifeassuredsurvivingtilltheendoftheselectedtermofthelifeinsurancepolicyis referredtoas a) Maturityclaims b) Deathclaims c) Annuity d) Noneoftheabove Inrespectofmaturityclaimsunderalifeinsurancepolicy,theactiontobetakenisnormallyinitiatedby a) Thepolicyholder b) Theinsurancecompany c) Theplaner d) Theintermediarywhosoldthepolicy Incase ofclaimarising out ofthedeathofthelife insuredunderthelifeinsurance policy,the money would normallybepaidto a) Thespouseofthelifeassured b) Thefirstsonofthelifeassured c) Themotherofthelifeassured d) Thepersonnominatedunderthepolicybythelifeassured,ifany

125.

126.

127.

128.

129.

130.

Incasethepolicyownerandthelifeassuredunderalifeinsurancepolicyaredifferent,thenthedeathclaimwould bepayableto a) Thelegalheirsofthelifeassured b) Thepersonnominatedtoreceivethepolicymoneys c) Thepolicyowner d) Thespouseandchildrenofthelifeassured Thewaitingperiodunderadisabilitybenefitpolicyrefersto a) Theperiodoftimethatmustelapsebeforethepolicybenefitwillcommence b) Theperiodoftimethatmustelapsebeforesettlementofclaimaftersubmission c) Theperiodoftimethatmustelapsebeforetheissueofthepolicydocument d) Theperiodoftimethatmustelapsebeforetheproposalcanbeconsidered Incaseofhealthinsuranceclaimstheinsurerhastobeinformedassoonas a) Thebillsofthehospitalwheretheinsuredwashospitalisedarepaid b) Thecourseoftreatmentfortheinsuredpersoniscompleted c) Thehospitalisationoftheinsuredperson d) Thehealthdisorderisnoticed Incaseofclaimsunderpropertyinsurance a) Theamountpayableshallbeguaranteedunderthepolicy b) TheamountpayableshallbeassessedinaccordancewiththePrincipleofIndemnity c) Theamountpayableshallbeatthesolediscretionftheinsurer d) Noneoftheabove Incaseofdisabilitybenefitclaims a) Thepolicyholderhastosubmitmedicalcertificatesfromtheattendingdoctor b) Thepolicyholdermayhavetoundergoamedicalexaminationbytheapprovedmedicalexaminer c) Thepolicyholdermayhavetoundergoafewspecificmedicalexaminationscalledfor d) Alltheabove Theinsuranceplannerorintermediaryhasaroletoplayin a) Deathclaimsincaseoflifeinsurancepolicies b) Disabilityclaimsincaseofpersonalaccidentpolicies c) Healthinsuranceclaims d) Alltheabove Everyinsurerhastohave_____________inplaceforgrievancehandling a) Aseparateombudsmanforthecompany b) Anappointedarbitratortomediateincaseofdisputes c) Aneffectivegrievanceredressalmechanism d) Noneoftheabove Thelicencesissuedtotheintermediariesarevalidfor a) Oneyearfromthedateofissue b) Twoyearsfromthedateofissue c) Threeyearsfromthedateofissue d) Fouryearsfromthedateofissue EveryagentwhohasbeenlicensedbytheIRDAhastoundergoaminimumtrainingbefore a) Theexpiryofoneyearofissueofsuchalicence b) Therenewalofhislicenceonceinthreeyears c) Heisallowedtodrawhisfirstremunerationfromtheinsurer d) Hesolicitsandprocuresinsurancebusinessfromclients TheregulatorforinsuranceindustryinIndiaisthe a) ControllerofInsurance

131.

132.

133.

134.

135.

136.

137.

138.

139.

b) InsuranceRegulatoryandDevelopmentAuthority c) InsuranceOmbudsman d) TariffAdvisoryCommittee 140. TheIRDABill,1999amendedtheprovisionsof a) InsuranceAct,1938 b) LifeInsuranceCorporationAct,1956 c) GeneralInsuranceBusinessNationalisationAct,1972 d) Alloftheabove AnIndianInsuranceCompanycantransact a) LifeandGeneralInsuranceBusiness b) LifeInsuranceandReinsurancebusiness c) GeneralInsuranceandReinsurancebusiness d) Allthethreebusinesses e) EitherLifeorGeneralInsuranceorReinsuranceBusiness LifeInsurersprovideproductswhichmeet a) Riskprotectionneeds b) Investmentneeds c) Boththese d) Boththeseandalsomedicalexpenseneeds LifeInsurancebusinessisdefinedunderInsuranceAct,1938toinclude a) Disabilityanddoubleortripleindemnityaccidentbenefits b) Annuitiesuponhumanlife c) Superannuationallowancesandannuitiespayableoutofsuperannuationfunds d) Alltheabove GeneralInsurancebusinessisdefinedtoinclude a) FireInsurance b) MarineInsurance c) Miscellaneousinsurancebusiness d) Alloftheabove e) Noneoftheabove HealthInsurancebusinessorhealthcoverisdefinedunder a) InsuranceAct,1938 b) GeneralInsuranceBusinessNationalisationAct,1972 c) IRDA(RegistrationofIndianInsuranceCompanies)Regulations,2000 d) Noneoftheabove BeforethepassingofIRDAAct,1999,GeneralInsurancebusinesswastransactedinIndiaby a) L.I.CofIndia b) G.I.CofIndia c) G.I.CofIndiaalongwithits4subsidiaries d) Alloftheabove ThecommitteesetuptosuggestreformstotheInsurancesectorwasheadedby a) ShriBimalJalan b) Dr.C.Rangarajan c) ShriR.N.Malhotra d) Dr.S.A.Dave

141.

142.

143.

144.

145.

146.

147.

148.

TheIRDAbillwaspassedin a) April2000 b) December1999 c) April1993 d) October2000 After the passing of the IRDA Act, 1999 companies have to obtain a certificate of registration for transacting insurancebusinessfrom a) DepartmentofCompanyAffairs b) TheSecuritiesExchangeBoardofIndia c) TheIRDA d) DirectorateofEconomicAffair TheminimumpaidupcapitalrequiredforstartingaLifeInsuranceCompanyis a) Rs.100Crore b) Rs.200Crore c) AsfixedbytheIRDA d) Rs.50crore

149.

150.

AnswerstoMockTest1Module2 1.c) 2.b) 3.b) 4.c) 5.d) 6.b) 7.e) 8.a) 9.a) 10.c) 11.b) 12.b) 13.a) 14.b) 15.a) 16.a) 17.b) 18.b) 19.d) 20.a) 21.c) 22.b) 23.c) 24.d) 25.a) 26.d) 27.c) 28.d) 29.c) 30.b) 31.b) 32.a) 33.c) 34.a) 35.b) 36.a) 37.b) 38.c) 39.b) 40.b) 41.c) 42.c) 43.a) 44.b) 45.d) 46.b) 47.a) 48.c) 49.b) 50.c) 51.c) 52.c) 53.b) 54.c) 55.c) 56.b) 57.b) 58.b) 59.c) 60.b) 61.a) 62.c) 63.c) 64.b) 65.c) 66.b) 67.b) 68.c) 69.c) 70.b) 71.c) 72.b) 73.c) 74.c) 75.b) 76.a) 77.a) 78.c) 79.b) 80.c) 81.b) 82.c) 83.b) 84.a) 85.c) 86.b) 87.a) 88.b) 89.c) 90.b) 91.b) 92.b) 93.a) 94.d) 95.b) 96.d) 97.e) 98.d) 99b) 100.d) 101.c) 102.b) 103.a) 104.c) 105.a) 106.b) 107.b) 108.c) 109.d) 110.c) 111.a) 112.a) 113.c) 114.c) 115.b) 116.b) 117.c) 118.b) 119.b) 120.c) 121.c) 122.a) 123.c) 124.c) 125.a) 126.d) 127.a) 128.b) 129.d) 130.c) 131.a) 132.d) 133.b) 134.d) 135.d) 136.c) 137.c) 138.b) 139.b) 140.d) 141.e) 142.c) 143.d) 144.d) 145.c) 146.c) 147.c) 148.b) 149.c) 150.a)

Mock Test - 2
Instructions
1. 2. 3. 1. Choosetheclosestanswer. Eachquestioncarriesonemark. Thereisnegativemarkingtotheextentof20%. Thepowertoregulatetherates,advantages,termsandconditionsthatcanbeofferedbyinsurersinrespectof generalinsurancebusinessvestswith a) LossPreventionAssociationofIndia c) TariffAdvisoryCommittee 2. TheIRDAcanconsistofamaximumof a) 10membersapartfromtheChairperson c) 9members 3. b) 10membersincludingthechairperson d) Noneoftheabove b) GeneralInsurancecouncil d) IRDA

InsuranceAdvisorycommitteecanhaveamaximumnumberof___membersexcludingtheexofficiomembers a) Twentyfive c) Thirty b) Twenty d) Asfixedbythegovernmentfromtimetotime

4.

Thefunctionofreviewingtheriskbroughtinbyeachproposalforinsuranceisdoneby a) TheActuary b) Theunderwriter c) Theintermediary d)Thefinancemanager

Thepracticeofpassingontheexcessrisktakenbytheinsurancecompanytoanotherformofinsureriscalled a) Groupinsurance b) Deductible c) Reinsurance d) Noneoftheabove

The only form of intermediary allowed to procure insurance business before the passing of the Insurance (Amendment)Bill,2001is

a) Brokers 7.

b) Agents

c) Fieldofficers

d) Surveyors

Thebrokerisanindependentintermediaryworkingasarepresentativeof a) Theinsurancecompany c) Theclient b) Theregulator d) Noneoftheabove

8.

Thepricingofinsuranceproductsisbasedon a) Thelawoflargenumbersb) c) Boththeabove Thelawofaverages d) Noneoftheabove

9.

Thefunctionofpricingofinsuranceproductsisdoneby a) Theunderwriter c) Theintermediarywhosellstheproduct b) Theactuary d) Noneoftheabove

10

The grievance redressal machinery that is available to the aggrieved policyholders apart from the internal mechanismthatthecompanyhasis a) Theprofessionalbodyoftheinsurers c) Thearbitrators b) Theombudsman d) Theinsuranceadvisorycommittee

11.

AsperIRDA(protectionofpolicyholdersinterest)regulations, a) Theinsurancecompanyshouldpayinterestfordelayedsettlementofclaims b) Theinsurancecompanyshouldpaydamagestotheclaimantsincaseofdelay c) Theinsurancecompanycannottakethehelpofsurveyorsforassessingthelosssufferedbytheinsured d) Theinsurancecompanycannotinvestigateintothebonafidesoftheclaimafterthelosshasoccurred

12.

Theinsurancecompanyhastorespondtoallcommunicationreceivedfromthepolicyholderswithin a) aweekofreceiptofsuchcommunication c) 10daysoftheirreceipt b) 15daysoftheirreceipt d) 20daysoftheirreceipt

13.

Thepolicyholderisgivenaperiodof__toreviewthetermsandconditionsgiveninthepolicydocument a) 10daysfromthedateofthepolicy b) 15daysfromthedateofthepolicy c) 15daysfromthedateofreceiptofthepolicydocument d) 10daysfromthedateofreceiptofthepolicydocument

14.

In order to ensure that the insurance company caters to the needs of the rural as well as socially backward population,theInsuranceActhasstipulatedthat a) Everyinsurershouldopenofficesinruralareasofthecountry b) Everyinsurershouldemploycertainpersonsfromtheruralandsociallybackwardpopulation c) Every insurer should procure a minimum business from the rural and socially backward sectors of the population d) Everyinsurershouldhaveaminimumnumberofagentsfromtheruralandsociallybackwardsectors

15.

The penalty stipulated for non compliance with the rural, social sector obligations cast upon the insurance companiescaninclude a) Apenaltyincash b) Imprisonmentofperson(s)responsibleforcomplyingwiththeregulations c) Cancellationofcertificateregistration d) Alloftheabove

16.

Lossforecastingisdonebyinsurerswiththehelpof a. Lawofdemand c. Lawofconsumerpropensity b Lawoflargenumbers d. Alltheabove

17.

WhatisthedifferencebetweenLifeandPropertyInsurances? a. Lifeinsuranceislongtermwhilepropertyinsuranceisgenerallyofoneyearinduration b. Lifeinsurancecontractsalsoofferreturnoninvestmentwhilepropertyinsurancecontractsdonotofferanysuch return c. Life insurance contracts are assured benefit contracts while property insurance contracts are contracts of indemnity d. Noneoftheabove

18.

Principleofsubrogationisacorollaryto a. PrincipleofInsurableInterest c. DoctrineofUtmostGoodFaith b. PrincipleofIndemnity d. Noneoftheabove b. PrincipleofInsurableInterest d. Noneoftheabove

19.

Uberrimafidesininsurancerefersto a. PrincipleofIndemnity c. DoctrineofUtmostGoodFaith

20.

CaveatEmptormeans a. UtmostGoodFaith c. Letthesellerbeware b. Letthebuyerbeware d. Noneoftheabove

21.

Anexpresswarrantyininsurancemeans a. Itrunsconcurrentlywiththepolicy b. Itisexpresslymentionedinthepolicy c. Itoverridesallotherconditionsandwarranties d. Alltheabove

22.

Franchiseininsuranceparlancerefersto a. Anoutletofaninsurancecompanyhavingfranchiseagreementtosellinsurance b. Akindofdeductiblefromtheinsuranceclaims c. AninsurancecompanyhavingitsbaseinFrance d. Noneoftheabove

23.

ThewordAverage,ininsurancemeans a. Averageperformanceofaninsurancecompany b. Averageperformanceofanagent c. Underinsurance d. Noneoftheabove

24.

ThirdPartyAdministratorswillservice a. Motorinsuranceclaims c. WorkmensCompensationclaims b. Healthinsuranceclaims d. Alltheabove

25.

APackageMotorInsurancepolicywillcover a. Onlydamagetothevehicle c. Injurytoowner/driver b. Onlyliabilitytothirdparties d. Alltheabove

26.

ThirdPartyLiabilityinsuranceforMotorvehiclesplyingatpublicplaceshasbeenmadecompulsoryby a. InsuranceAct,1938 c. MotorVehiclesAct,1988 d. b. IRDAAct,1999 Noneoftheabove

27.

Whichofthefollowingstatementsarecorrect 1. Riskmeansuncertaintyaboutoutcome 2. Riskincludesapossibilityofaloss 3. Riskisaconditionwherethereisapossibilityofadversedeviationfromadesiredoutcome. a. 1&2arecorrect b. 2&3arecorrect c. 1&3arecorrect d. Allarecorrect

28.

Perilininsurancemeans a. Financialloss c.Theconditionthatcanincreasetheloss b. Thecauseofloss d. Theamountofcompensationincaseofloss

29.

InInsurance,hazardsareclassifiedinto a. PureandSpeculative c. Physical,MoralandMorale b. StaticandDynamic d. FundamentalandParticular

30.

Whichofthefollowingisaninsurablerisk a. PureRisk b. SubjectiveRisk c. DynamicRisk d. SpeculativeRisk

31.

Riskanalysisisdonetomeasure a. Thefrequencyofrisk c. Boththeabove b. Theseverityofrisk d .Noneoftheabove

32.

Whichofthefollowingisanunderlyingprincipleininsurance? a. Theoryofprobability c. Boththeabove b. Lawoflargenumbers d. Noneoftheabove

33.

Whichofthefollowingisnotnotnotnotnotanessentialofavalidcontract? a. Offerandacceptance c. Capacityofcontract b. Consideration d. DocumentaryEvidence

34.

WhichofthefollowingprinciplesisnotapplicabletoLifeInsurance? a. PrincipleofUtmostGoodFaith c. PrincipleofSubrogation b. PrincipleofInsurableInterest d. DoctrineofAdhesion

35.

WhichofthefollowingisnotnotnotnotnottrueaboutinsurableinterestinLifeInsurance? a. Everypersonhasunlimitedinsurableinterestinhisownlife b. Apartnerhasinsurableinterestonlivesofotherpartner c. Anemployeehasinsurableinterestonthelifeofhisemployer d. Husbandhasinsurableinterestinthelifeofhiswife.

36.

IninsurancetheprincipleofUtmostGoodFaithisapplicableto a. Theinsureronly c. Boththeinsurerandinsured b. Theinsuredonly d. Noneoftheabove

37.

LifeInsurancebenefitscanbepaidonthedeathofthelifeassuredasperprovisionmadein a. Nomination c. Legalheirs b. Will d.Anyoneoftheabove

38.

TermInsuranceprovidesforpaymentofcapitalsumassuredincaseof a. Deathofthelifeassuredbeforetheendoftheterm b. Deathofthelifeassuredoronsurvivaltilltheendoftheterm c. Survivalofthelifeassuredtilltheendofthetermonly. d. Deathofthenomineebeforetheendoftheterm

39.

Indecreasingterminsurancepolicies,thedeathbenefitpayablewill a. Remainthesamethroughoutthetermofthepolicy b. Decreaseregularlytilltheendoftheterm c. Increaseperiodicallyoverthepolicyterm d. Bedecidedbytheinsurereveryyear.

40.

Renewableterminsurancepolicygivesthepolicyowneranoptionto a. Cancelthepolicyatanytimeandtakerefundofpremium b. Buyadditionalpoliciesduringthetermofthepolicy. c. Continueinsurancecoverforadditionalterm d. Noneoftheabove

41.

Wholelifeinsurancepoliciesprovidefor a. Paymentofsumassuredondeathduringafixedtermonly b. Paymentofsumassuredondeathduringafixedtermorsurvivaltillendoftheterm c. Paymentofsumassuredonlyonsurvivaltilltheendoftheterm d. Paymentofsumassuredondeathanytimeaftercommencementofpolicy.

42.

Endowmentpoliciesprovideforpaymentofcapitalsumassured a. Onlyondeathofthelifeassuredduringthetermofthepolicy b. Eitherondeathofthelifeassuredduringthetermoronsurvivaltillendoftheterm c. Onlyonsurvivalofthelifeassuredtilltheendoftheterm d. Periodicallyinregularintervalsduringtheterm

43.

UnderAnticipatedEndowmentpolicies,CapitalSumAssuredispayable a. Onlyonmaturityofthepolicy b. Ininstalmentsatregularintervalsoftimeduringthetermofpolicy c. Onlyondeathofpolicyholder. d. Noneoftheabove

44.

UnderJointLifeEndowmentPoliciesinsurancecoveragecanbeupto a.Deathoffirstlifeassured b. c.Deathofbothlivesassured Deathofsecondlifeassured d. Alltheabove

45.

WhichofthefollowingisnotnotnotnotnotavailableinVariableLifeInsurance(VLI)? a. Choiceofinvestmentdecisionforcashaccumulation b. Guaranteeddeathbenefit c. Guaranteedreturnoncashaccumulation d. Noneoftheabove

46.

WhichofthefollowingisnotnotnotnotnottrueofUniversalLifeInsurance(ULI)? a. Choiceofinvestmentdecision c. Flexibilityinpremiumpayment b. Guaranteeddeathbenefit d. Optionofdeathbenefit

47.

WhichofthefollowingisnottrueofVariableUniversalLifeInsurance(VULI)? a. Flexibilityinpremiumpayment c. Guaranteeddeathbenefitd. b. Flexibilityininvestmentoption Guaranteedreturnoninvestmentpremium

48.

RidersonaLifeInsurancePolicyare a. Inbuiltprovisionwithallpolicies b. Additionalbenefitsthatcanbepurchased c. Availablefreeofcostundercertainpolicies d. Noneoftheabove

49.

Ingroupinsurancethememberswillhavechancetochoosetheinsurancecoverlimit. a) True b)False

50.

Oldagesecuritycanbeprovidedby a. Governmentassocialsecurity c. Selfbyindividualpension b. Employerthroughoccupationalpension d. Anyoftheabove

51.

Pensionschemeforemployeescanbedesignedas a. Definedbenefitschemesonly c. Anyoftheabove b. Definedcontributionschemesonly d. Noneoftheabove.

52.

Fixedannuityprovides a. Guaranteedannuityinstalments c. Annuitybasedonmarketrates b. Veryhighreturns d. Noneoftheabove

53.

Variableannuityprovides a. Guaranteedreturns b. Investmentoptionduringaccumulationstage

c. AnnuitylinkedtoEquityIndex d. Noneoftheabove

54.

Aperiodcertainannuitywillprovideforannuitypayments a. Forafixedperiodonly b. Forthelifeoftheannuitantandguaranteedforafixedperiod. c. Forthelifeoftheannuitant d. Forthefixedperiodandafterthatforthelifeoftheannuitant

55.

Ifsuicideclauseisoperativeinapolicy a. Thepolicywillprovideforpaymentofcapitalsumassuredondeathduetosuicide. b. TheInsuranceCompanywillnotpayanysum,incaseofdeathduetosuicide c. TheClaimbydeathduetosuicidewillbeconsideredfor50%ofSA d. Paymentwillbelimitedtorefundofpremium.

56.

Incaseofdeathofthelifeassuredduringgraceperiod,theinsurancecompanywill a. Notpaytheclaim b. Paythedeathbenefitinfull c. Refundpremiumpaid d. Paythedeathbenefitafterdeductingthepremiumdue.

57.

Revivalofalapsedpolicycanbe a. Declined c. Allowedonexistingconditions b. Allowedonrevisedconditions d. Alltheabove

58.

Lapsedpolicycanberevived a. Atanytimeafterlapse b. Beforedateofmaturityofthepolicy c. Onlyaftertheexpiryofayearfromlapsation d. Noneoftheabove

59.

Surrendervaluewillnotbepaidunder a. TermInsurancePolicies b. ImmediateAnnuityPolicies c. DeferredAnnuityPoliciesafterAnnuityhascommenced d. Alltheabove.

60.

Policycannotbesurrenderedif a. Policyisabsolutelyassigned b. Policyislapsed c. Policyisassignedandifassigneeisaminor d. Noneoftheabove

61.

Loansunderpoliciesaregranted

a. Uptofullsumassured c. Withinthesurrendervalueofthepolicy

b. Uptotwicethesumassured d. Upto50%ofthesumassured

62.

Matchthefollowing

GroupA
1. 2. 3. 4. DynamicRisk StaticRisks PureRisk SpeculativeRisk

GroupB
m) Itinvolvesthoselossesthatoccurevenifthere werenochangesineconomy. n) Thisriskisusedtodesignatethosesituations thatinvolvethechanceoflossornoloss. o) Theserisksarisefromchangesintheeconomy. p) Itisariskwhichdescribesasituationwhere thereispossibilityofgain. b) 1m,2n,3o,4p c) 1o,2m,3n,4p d) 1n,2p,3m,4o

a) 1p,2o,3m,4n 63.

Riskmanagementisascientificapproachwhichdealswith a) Purerisks b) Dynamicrisks c) Staticrisks d) Speculativerisks

64.

Whichofthefollowingactivityisnotinvolvedintheprocessofriskmanagement a) Riskidentification c) Buyinginsurance b) Riskanalysis d) Selectionofriskmanagementtool.

65.

Statetrueorfalse. InsuranceisamechanismoftransferringariskfromoneindividualtoaGroup.Itisnothingbutsharingoflosses byallmembersofthegroup a) True b) False

66.

Whichofthefollowingstatementsregardinguniversallifeinsurancearetrue. 1. AllowsinsuredtobuyTerminsuranceandinvestanadditionalmount 2. FlexibilityinPremium,Frequencyandcoveragewithinlimits 3. Aminimuminterestrateisguaranteed. a) Statement1only b) Statement2only c) Statement3only d) Alltheabove

67.

Ingroupinsurancethememberswillhavechancetochoosetheinsurancecoverlimit. a. True b. False

68.

IsrevivalofapolicyaNovatioofthecontract a. True b. False

69.

ApersonXhastakenapolicyforsumassuredof$10000underterminsurancecoveragefor10years.Afterfive yearsthepaymentofpremiumwasstoppedandpolicylapsed.WhetherAisentitledforsurrendervalueofthe policy a. Yes,heisentitled b. No,heisnotentitledforsurrendervalue

c. Cantbedecided 70. Whichofthefollowingisnotacomponentoflifeinsurancepremium a.Mortality b. Interest c. Purepremium d. Expenses

71.

WhichofthefollowingfactorsdoesnotaffectMortality a) Age b) Colour c) Occupation d) Habits

72.

Whichofthefollowingisthemethodofratingforunderwriting a) Experimentalmethod c) Numericalmethod b) Probabilisticmethod d) Noneoftheabove

73.

Whichofthefollowingisconsiderationforaninsurancecontract a) Proposalform b) Premium c) Policybond d) Otherdocuments

74.

Whatdoyoumeanbyproposalform a) Itisdocumentsubmittedbyprospectiveinsuredtoinsurancecompany b) Itiswrittendocumentbyinsurancebroker c) Itiswrittendocumentbymedicalexaminer d) Noneoftheabove

75.

Whichofthefollowingisnotaninsuranceproduct a) Wholelifeinsurance c) Insurancecovernote b) Endowmentinsurance d) Terminsurance

76.

Whichofthefollowingisnotaninsuranceintermediary a) Proponentofinsurance c) InsuranceBroker b) InsuranceAgent d) InsuranceConsultant

77.

WhichofthefollowingbenefitsofemployeescannotbecoveredunderGroupinsurancescheme a) Gratuitybenefit c) Childreneducation b) Superannuationbenefit d) Noneoftheabove

78.

Givenbelowaresomeoftheinsuranceconcepts.Pleasemarkwhethertheybelongtopersonalorgroupinsurance byputting(P)or(G) 1) thesharingofriskamongpolicyholdersofacompany 2) thetransferofrisktoaparticulargroup 3) Thelifeassuredhadachoiceondecidingtheinsuranceamount. 4) Thelifeassuredhadnochoiceondecidingtheinsuranceamount. a) 1P,2P,3G,4G b) 1P,2G,3P,4G c) 1G,2G,3P,4P d) 1G,2P,3P,4G

AnswertoMockTest2
1.c) 7.c) 13.c) 19.c) 25.d) 31.c) 37.d) 43.b) 49.b) 55.b) 61.c) 67.b) 73.b) 2.b) 8.c) 14.c) 20.b) 26.c) 32.c) 38.a) 44.c) 50.d) 56.d) 62.c) 68.a) 74.a) 3.a) 9.b) 15.d) 21.b) 27.d) 33.d) 39.b) 45.c) 51.c) 57.d) 63.a) 69.b) 75.c) 4.b) 10.b) 16.b) 22.b) 28.b) 34.c) 40.c) 46.a) 52.a) 58.d) 64.c) 70.c) 76.a) 5.c) 11.a) 17.c) 23.c) 29.c) 35.c) 41.d) 47.c) 53.d) 59.d) 65.a) 71.b) 77.c) 6.b) 12.c) 18.b) 24.b) 30.a) 36.c) 42.b) 48.b) 54.a) 60.d) 66.d) 72.c) 78.b)

Mock test - 3
Instructionstocandidates a) b) c) d) e) Therearemultiplealternativesforeachquestion Ticktheanswerwhichyoufeelisclosesttothecorrectanswer EachQuestioncarriesthemarksindicated Negativemarkingtotheextentof20%isapplicablei.e.foreverywrongansweryouwilllose0.2marks. Thereare72questionstotalling100marks

Marks
1. Atabuildingsite,Rameshsustainsinjuries,whenthebuildingcontractorscarrunsoverhistoesandheisunable toattendworkfor6weeks.WhataretheoptionsavailabletoRamesh? 2 a) Rameshgetsaccidentinsurance,thecontractoralsogetsaccidentinsurance b) Rameshgetsaccidentinsurance,thecontactorgetsthirdpartyliabilityinsuranceandRameshcansuethe contractorfordamages c) Rameshgetsdisabilityinsuranceifhehasone,thebuildingcontractorgetsthirdpartyliabilityinsuranceand Rameshalsogetsinsuranceforthirdpartynegligence d) Rameshgetsdisabilityinsurance,thecontractorgetsaccidentinsurance. 2. TheStateconsumerdisputesredressalforumcandecidecases: a) forcompensationfrom10to20lakhs b) forcompensationhigherthan5lakhsbutlowerthan20lakhs c) forcompensationhigherthan20lakhs d) forcompensationlowerthan20lakhs 3. Anincreasingterminsurancemeans a) Theterminsurancesumassuredincreaseswithinflation b) Theterminsuranceincreasesatintervals c) Boththepremiumandsumassuredincreases d) Onlythepremiumgoesonincreasing 4. Mr.Rao,awidowedsurgeonearning27,00,000p.a.hasthefollowingdetails:Electronicitemsmarketvalue 2,50,000 Acquisitionvalue 25,000 1 1

Furniturereplacementcost Housemarketvalue Costofbuildinghouse Daughtersmarriage Childrenseducation Retirementfunding Currentprofessionalindemnity Currentinvestments

14,00,000 65,00,000 15,00,000+costofland 2,50,000 15,00,000 45,00,000 1,50,000 10,00,000

Hispriorityinregardtothefollowinginsurancesshouldbe a) PTD b) Lifecover c) Propertyinsurance d) Professionalindemnity a) a,b,c,d 5. b) b,c,a,d c) c,a,b,d d) d,c,a,b

Mr.andMrs.Rao,aged46and42years,bothhavealifeexpectancyof35years.Calculatetheinsurancerequired basedonneedbasedandincomereplacementmethodsonMr.Raoslife.Youhavethefollowinginformation: Currentinvestments Rs.25,00,000 Expenses Rs.3,00,000(including1lakhofMr.Raospersonalexpenses) Mr.Raosincomeposttax Rs.3.5lakhs Finalcosts Rs.1lakh Posttax,postinflationrate/discountfactoris3% a) 42lakhs,117lakhs b) 20lakhs,68lakhs c) 42lakhs,83lakhs d) 20lakhs,52lakhs 4

6.

RameshandMahesharehealthy,ablebodiedmenworkinginmines.Rameshlivesonafloodplain,Maheshlives onahillinthenexttown.Whiletakingoutinsurance,theinsurancecompanyproposesahigherpremiumfor Ramesh.HowshouldRameshreact? 2 a) Botharehealthy,bothshouldbechargedthesamepremium b) Theyshouldinfactgetadiscountforbeingablebodiedmen c) Livingonafloodplaindoesnotinanywayaffectthepremium d) Rameshshouldunderstandthattheriskforhimishigher,thereforethehigherpremium.

7.

Thecorecharacteristicfeatureofthewholelifepolicyis a) Paymentonthewholelifepolicyfromtheinsureriscertain b) Premiumpaymentforaguaranteedtermiscertain c) Itdoesnothaveasurrendervalue d) Itcoversalltheneedsoftheinsuredoverallthestagesofhislife

8.

Theendowmentinsurancepolicyischaracterisedby a) Sumassuredbeingpayableeitheratdeathorattheendoftermofthepolicy,whicheverisearlier b) Sumassuredbeingpayableattheendofthepremiumpayingterm c) Returnofpremiumsattheendofthepolicy d) Returnofpremiumsplusbonusattheendofthepolicyorondeath

9.

Deferredannuityiswhen a) thereisaprespecifiedtimelagbetweenpaymentofpremiumsandpaymentofbenefits

b) Thereisasetofpremiumpaymentsafterwhichthebenefitstartsatatimelaterthanthestartofthepolicy. c) Thepremiumpaymentsaredeferredtilltheendofthepolicy d) Thebenefitpayableisdeferredtilltheendofthepolicyterm

10.

Uberrimaefideirefersto a) Letthebuyerbeware c) Utmostgoodfaith b) Caveatemptor d) Principleofadhesion

11.

Replacementcostininsuranceparlancerefersto a) Marketvalue c) Costofnewproductlessdepreciation b) Marketvaluelessdepreciation d) Costofnewproduct

12.

Mr.andMrs.SrinivashaveMr.Srinivassmotherstayingwiththem,whoisentirelydependentonthem.Asan insuranceadvisor,youwouldestimatethelifeexpectancyof 2 a) Mr.Srinivasbecauseherunsthehousehold b) MrsSrinivasbecauseinherabsence,whowouldlookafterthemother c) Mr.SrinivassmotherbecauseMr.andMrs.Srinivashavetosupportherforlife d) Noneoftheabove

13.

Youborrowyourfriendscarbuthesaysthatitdoesnothaveinsurance.Youpaythepremiumandgetthe insurancerenewed.Youmeetwithanaccidentandgetthecarrepairedatyourcost.Youfile aclaimwiththeinsurancecompanybutthecompanydeclinesit.Asanadvisor,whatdoyoufeel? 2 a) Thecompanyshouldpayyouasyouhavepaidthepremiumandthereforehaveinsurableinterest b) Thecompanyshouldpayyoubecauseyouhavegotthecarrepairedandthereforeyouhaveinsurableinterest. c) Thecompanyshouldpayyoubecauseyouweredrivingit. d) Thecompanyisright.Youdonothaveinsurableinterestinthecarandthereforethepaymentofclaimwillbeto yourfriend.

14.

Whatisnotnormallycoveredinhouseholdersinsurance a) BreakdownofVCRduetofaultinelectricalwiring b) Damagetoexpensivedoorduetoattemptedbreakinbyaburglar c) Damagetoelectronicitemduetomanufacturingdefect d) Damagetojewelleryduetoflooding

15.

Overseasmediclaimpolicydoesnotcoverwhichofthefollowing a) lossofpassport c) medicalcosts b) lossofbaggage d) Personalaccident

16.

Mortalityrateisthe

a) rateofdeathinthepopulation b) probabilityofdeathinagroup c) probabilitythattheinsuredwilldiebeforereachingacertainage d) rateofdeathinagroup 17. Subrogationmeansthat a) theinsurerisentitledtoanyprofitsthattheinsuredmightmakefromtheinsuranceclaim b) theinsurerisentitledtoapartoftheclaimwhichisunjustified c) theinsuredisentitledtothesumassured d) theinsuredisentitledtoatleastreturnofpremiumsonsurvival 1

18.

Theprincipleofindemnitydoesnot a) differentiatebetweendifferenttypesofpolicies b) applytogeneralinsurancepolicies c) recognisethatitisdifficulttoestablishtheextentofinsurableinterest d) havetheprincipleofsubrogationasacorollary

19.

Thestepsintheriskmanagementprocessare a) Riskidentification c) Riskevaluation e) Riskfinancing a) a,b,c,d,e b) b,c,d,a,e c) d,a,c,b,e d) e,b,c,d,a b) Riskanalysis d) Riskcontrol

20.

Ram,55,worksforaprivatefirmandearnsmostofhissalaryascommission,hedoesnothavebenefitslikesick leave,LTAetc.HeissingleandalreadyhasTPDcover.Whatshouldhis prioritybe? 2 a) Lifecover c) Endowmentpolicy b) Healthinsurance d)Propertyinsurance 2

21.

Insuredsdeclaredvalue(IDV)doesnotapplytowhichofthefollowing a) Propertydamageinmotoraccident c) Thirdpartyliabilityclaim b) Curios,oldjewelleryetc. d) Propertyinsurance

22.

Peoplenormallywantinsurancebasedonwantsratherthanneeds.Whichsuchinsurances doclientsnormallywant? a) motorcarinsurance c) lifecover b) healthinsurance d) incomeprotectioninsurance

23.

Mr.RammoorthylivesinChennaiwhichisnotearthquakeprone.Hedecidestotakeoutinsuranceonhisproperty. Asaninsuranceadvisor,whatwouldyourecommend? 2 a) Heshouldnottakeoutpropertyinsurancesincehedoesnotneedit. b) Heshouldnottaketheearthquakeoptionsinceitwillbetooexpensive. c) Heshouldnotoutpropertyinsurance,sinceitwillbetooexpensive. d) Hecantakeoutpropertyinsuranceasthepremiumwilldependontheriskandwillthereforebelowerin Chennai.

24.

Whichisoneofthefeaturesofthewholelifepolicy? a) Oneneednotpaypremiumsafteracertainbuildupofcashvalue b) Alapseinpremiumswillnotaffectthepolicy c) Youcansurrenderthepolicyandtakecashvalueatanytime d) Youcangetaloanuptoaspecifiedpercentageofthecashvalueatapredeterminedrate.

25.

Adverselossratiorefersto a) Higherpremiumbeingreceivedbytheinsurer b) Lowerpremiumbeingreceivedbytheinsurer c) Lowerthanexpectedclaimsratiointhepool d) Higherthanexpectedclaimsratiointhepool

26.

Duetothefollowingfactors,aninsurancecompanymaymakeasurplus A) Mortality C) Expenses E) Adverselossratio a) A,B,C b) A,B,C,D c) A,B,C,D,E d) Noneoftheabove B) Investmentrate D) Lapses,surrendersofpolicy

27.

Thefollowingfactorsaffectthepremiumonapolicy A) Mortality C) Expenses a) A,B,C,D b) A,C,D B) Investmentrate D) Seniormanagementpolicies c) A,B,D d) A,B,C

28.

Anendorsementis a) awarranty analterationinthepolicyconditions b) animpliedwarranty d) acompulsorydeductible

1 c)

29.

AsubstandardIndianlifeis a) abelowaverageIndianlife b) Anindividualwithhealthproblems c) Alifewhichcannotbeinsured d) Classifieddependentontheunderwritingstandardsoftheinsurancecompany.

30.

Averageorcoinsuranceclauseisintroducedinpropertyinsurance a) toreducethenumberofclaims b) toreducethepremiumpaid c) toreducebothclaimsandpremium d) tomaketheinsuredmoreresponsibletowardstheprotectionofhisproperty.

31.

Theroleofanactuaryininsuranceis a) todecidethepoliciesoftheinsurancecompany b) toacceptorrejectinsuranceclaims c) todecideonthefinancesoftheinsurancecompany

d) todecidethepremiumspaidbythecompany 32. A)Anadvertisementforinsurancecannotcomparecomparableinsuranceproducts B)Anadvertisementforinsurancehastoidentifytheproductasinsurance a)BothA)andB)arecorrect c)OnlyA)iscorrect 33. b) BothA)andB)arefalse d) OnlyB)iscorrect 2

Vishalhasinsuredhistwowheelerforpropertyrisk,wearsahelmetwhilehedrivesbutdoesnot haveaccidentinsurance.Vishalhas a) takenagraveriskbynottakingaccidentinsurance b) madeamistake,insteadofpropertyriskinsurance,heshouldtakeaccidentinsurance c) transferredhispropertyrisk,controlledsomeofhisriskandretainedtherest d) doneagoodthingbyreducinghispremiumpayoutbynottakingaccidentinsurance 2

34.

AneventwithProbability1iscalleda: a) Impossibility c) Uncertainty b) Certainty d) Neitherofabove.

35.

Insurancemaybeviewedasacommodity a) True b) False

36.

IdentifydisadvantageofInsuranceasatoolofRiskManagement: a) Losscontrol c) Indemnification b) MoralHazard d) Investiblefundgeneration

37.

Mr.SharmaisanAdvocatehavingaroaringpracticeconsistingofhighlyvaluedintricatecases ofCompanyLaw.Clientsarecorporates.Hehas3youngjuniors.Cashtransactionsdonottake placeintheofficethathemaintainswithmodestfurnishing.Whichofthefollowingcoversis mostnecessaryforhim: a) FidelityGuarantee c) Publicliability b) ProfessionalIndemnity d) Burglary.

38.

Whichofthefollowingisnotanidealelementofaninsurablerisk: a) TheRiskmustbedefinite. c) Theriskmustbefortuitous b) TheRiskmustbecatastrophic d) Theriskmustbemeasurable.

39.

NoFaultliabilityistheothernameof: a. Absoluteliability c. Vicariousliability b. Strictliability d. Contractualliability

40.

AWarrantyisanundertakingbytheInsuredthat i. Somethingshallbedone a. only(i)iscorrect c. both(i)an(ii)arecorrect ii) somethingshallnotbedone. b. only(ii)iscorrect d. both(i)and(ii)areincorrect.

41.

WhichofthefollowingisnotaDeductible:

a. CompulsoryExcess c. ReInsurance 42.

b. VoluntaryExcess d. Franchise.

Mr.JaintookaLifeInsurancePolicywhichhecontinuedfor3years.Hediedwithinafortnightthereafter,suffering fromT.B.Mrs.JainlodgedthelaimasNominee.ThesumassuredwasRs.10.00lacs.TheInsurerhadindisputable evidencethatMr.Jainwashospitalizedfor10daysearliertohistakingtheproposalwhichwasnotdisclosedinthe proposalform.Thoughnofraudulentintentionwasestablished,theinsurerrepudiatedtheclaim: 2 a. RepudiationisinkeepingwithLaw b. RepudiationisnotinKeepingwithLaw. 1 b. Standerc.Libel

43.

WhichoftheTortisnotinsurable: a. Assault

44.

Insurableinterestrefersto: a. InterestpaidbytheinsuredtotheInsurer. b. InterestpaidbytheInsurertotheInsured c. InteresttakenbytheInsurerinthelifeoftheInsured. d. InterestoftheInsuredinthesubjectmatterofInsurance.

45.

Disclosureofwhichofthefactsbytheinsuredisnotmaterial: a. TermsofacceptanceofpreviousInsurance c. Factswhichincreasetherisk b. Factswhichdiminishtherisk d. Previousrecordoflossesandclaims.

46.

InaMortalitytablewhichofthefollowingiscorrect? a) qx=lx+dx c) qx=dx/lx b) qx=lxdx d) qx=lx/dx.

47.

NetPremiumrefersto: a) PremiumreceivedfromPolicyholder c) Costofdoingbusiness b) PremiumIncomelesstaxes d) Costofexpectedlosses.

48.

WhichofthefollowingclassesofbusinessiscoveredbyMarketAgreement: a) Fire c) PublicLiability b) CompulsoryThirdPartyLiability d) Workmenscompensation

49.

Mr.RameshsubmittedaProposalonhisownlifeon1.3.2003.ItwascompletedbytheInsurer andthePolicyBondwasreceivedbyhimon8.3.2003.On20.3.2003,Mr.Rameshreturnedthe PolicyBondstatingthereasonforhisrefusaltoacceptsomeofthetermsprintedinthe PolicyBondandaskedforrefundofpremiumpaid.IsMr.Rameshisentitledto: a) anyrefund b) Norefund

50.

Forayoungadult,leastimportantis: a) Propertycover c) AccidentCover b) BasicLifeCover d) CriticalIllnesscover

51.

WhichofthefollowingbenefitsisnotderivedfromaTermInsurancePolicy. a) LowerPremium c) Convertibilityoption b) HigherCover d) Surrendervalue.

52.

Annuitycertainiswhere: a. ItiscertainthatAnnuitywouldbepaidforadefiniteperiod b. Itiscertainthatafixedannuitywouldbepaid. c. Itiscertainthatannuitywouldbepaidtilldeath. d. Itiscertainthatafixedannuitywouldbepaid.

53.

Mortgageredemptioninsuranceillustrates: a. Levelbenefitterminsurancewithlevelpremium b. LevelbenefittermInsurancewithsteppedpremium c. Increasingbenefitterminsurance d. DecreasingbenefittermInsurance

54.

WhatisnotnormallycoveredinMediclaim: a. Hospitalaccommodation c. Pregnancyandchildbirth b. Costofdiagnosticmedicine d. Professionalfeesofsurgeon.

55.

ABCHeartCentrehasagreatmarketreputtionandafullbusiness.Dr.MathurtheChiefHeartSurgeonisheldin highesteemnationwideforhisexpertiseandsuccessrateinsurgery.Hemadeoutstandingcontriutionforlast8 yearstoenablemarketleadershipforABCHeartcenter.WhatwillbethemostappropriatePolicythattheowners maytakeintheinterestofbusinessonthelifeofDr.Mathur: 2 a) PersonalaccidentInsurance. c) KeymanInsurance b) TermInsurance d) MediclaimInsurance. 1 b) Additionalpremiumforsupplementarybenefit d) Discountofpremium.

56.

LifeInsurancePolicyRideris: a) Extrapremiumforphysicalimpairment c) Restorationclausetoapolicy

57.

ThereisapropertyworthRs.10lakhs.AnInsurancecoverhasbeenpreferredbyitsownerfor Rs.6lakhs.Claimhasbeenlodgedforaloss.ThelossisvaluedforRs.2lakhs.HowmuchwilltheInsurerusually pay? 2 a) Rs.2lacs c) Rs.1.20lacs b) Rs.6lacs d) Rs.1.50lacs. 1

58.

IdentifytheitemnotexcludedusuallyinBurglaryinsuranceofhouseholdcontents: a. Cash c. Securities b. Jewellery d. Bullion

59.

Indemnityvalueformsthebasisofpayingclaimsnormallyfor: a. Jewellery c Building b. ElectronicAppliances d. Electricalappliances

60.

AProfessionalindemnitycoverexcludes: a. ThirdPartyPublicLiability c. LegalLiabilityofthenamedAssistants, b. LegalLiabilityoftheInsured d. Claimentsexpensesfordefence.

61.

ABCCompanyhadaFidelityGuaranteecoverforitscashier.Thecashiercommittedafraudin April2000.ThepolicyexpiredinthemonthofMarch2001.Itwasnotrenewed.Fraudwas detectedinDecember2001.Claimwaslodged.IstheClaim: a. Payable c. Payablepartially. b. Notpayable

62.

Mr.PaulownsaFordIkon.Heoptedtohavestatutoryminimumcovertoavoidhigherpremium.Oneday,in tryingtosaveachildwhiledriving,hiscarhitaparkedcar,causingdamagetoitforRs.5000/andthenhita boundarywallcausingdamagetoitforRs.5000/.HisowncarsufferedarepaircostofRs.8000/.Howmuch claimisadmissible. 1 a. Rs.18,000/ c. Rs.5000/ b. Rs.10,000/ d. Noneoftheabove

63.

PersonaldataforMr.Anilare: EarningRs.1.lacperannumDebtsRs.1,28,572/To supportdependants75%ofpredeathsalary(ifnodebt). Assumingsimpleinterestof7%perannum,howmuchtimesofcurrentannual salaryheneededforLifeInsurancecover,ifMultiplemethodisused: a) 10times c) 12times b) 8times d) 16times

64.

APlannerandProspectagreedforanEndowmentAssurancePolicyforRs.4lakhs,limitedpaymentfor10years withatermof20years.IfReversionarybonusistakenas7.5%perannumandTerminalbonusasRs.150/per 1000/,whatwillbethematurityvalue: 2 a. Rs.10,50,000/ c. Rs.10,70,000/ b. Rs.10,60,000/ d. Rs.10,80,000/65.

65.

Mr.Aryawillretire3monthsfromnowcompleting60years.His2sonsareverywelloffresidingabroad.He inheritedaflatwhereheresideswithMrs.Arya,bothingoinggoodhealth.Liabilitiesareinsignificantandpost retirementbenefitssubstantial.Theflatisverywelldecoratedwithvaluablemovableandimmovableitems.He ownsacarpurchasedlastyear.Hedoesnothaveanyinsurancecoverexceptforthecar,asofnow.Whichamongst thefollowingcoversinrelevantforhim: 2 a. EndowmentAssurance c. HouseholdInsurance b. MoneyBack d. TermInsurance 1

66.

Inquantifyingcostofpersonalriskofdeath,properpriorityamongstthefollowingwillbe: a. RepaymentofDebts c. Establishmentofanemergencyfund b. Funeralandotherexpenses d. FinalMedicalexpenses.

67.

OnlyfactofUnderwritingProcessis: a) Medical b) Financial

c) Occupational. e)Allofthem. 68. NumericalRatingsystemrefersto: a. RatetheperformanceofAgents c. RatetheRiskofProposers 69.

d) Noneofthem

1 b. RatetheperformanceofInsurers d. Ratethepremiumonstandardlives. 1

IndisabilityInsurancehigherpremiumsarenotchargedonconsiderationof: a.) Gender c) Occupation b) Age d) Pastime.

70.

WhatisthecorrectprioritysequenceinstepsofReview: A. Establishafrequency C. Developrevisedprogram a) ABCD c) ACBD B. Establishchangeinclientscircumstances

D.. Takeapprovaloftheclienttorevisedprogramme. b) ACDB d) ADBC

71.

PutinpropersequencethestepstobeadvisedbythePlannertotheclientforresolutionofinsurancecomplaints: 2 A. Arbitration C. Inhousecomplainthandlingcalloftheinsurer a.) ABCD c) ADBC B. Ombudsman D. ConsumerProtectionforums. b) ACBD d) CBAD

72.

IftheclientlodgesaclaimagainstPlannerfornegligentadvice,whatshouldbetheimmediatefirsttaskofthe Planner: 1 a. Paythedamageclaimed c. NotifytotheProfessionalIndemnityInsurer b. Persuadetheclaimant d. Noneoftheabove.

AnswerstoMockTest3
1. b 13. d 25.d 37. b 49. a 61. b 2. b 14. c 26. a 38. b 50. a 62. b 3. b 15. b 27. d 39. a 51. d 63. c 4. a 16. c 28. c 40. c 52. b 64. b 5. c 17. a 29. d 41. c 53. d 65. c 6. d 18. c 30. d 42. b 54. c 66. b 7. a 19. a 31. d 43. a 55. c 67. e 8. a 20. b 32. d 44. d 56. b 68. c 9. a 21. c 33. c 45. b 57. c 69. a 10. c 22. a 34. b 46. c 58. b 70. a 11. d 23.d 35. a 47. d 59. c 71. d 12. c 24. d 36. b 48. c 60. a 72. c

MOCK TEST - 4

(1)

Gamblingisprimarilyaninstanceof: (a) PureRisk (b) FinancialRisk (c) InvestmentRisk (d) SpeculativeRisk

(2)

PureRisksthathaveafinancialcosttothemmayariseinwhichofthefollowingcategories. (a) Personal (b) Property (c) Liability (d) Alloftheabove

(3)

Insuranceisprimarilyacaseof: (a) Riskretention (b) Riskreduction (c) Risktransfer (d) Riskprevention

(4)

Whichcharacteristicofrisksamongthefollowingisnotanabsolutemustforarisktobeinsured: (a) Thelossproducedbytheriskmustbedefiniteandmeasurable. (b) Thelossmustbefortuitousandaccidental (c) Thelossmustbereinsurable (d) Thelossmustnotbecatastrophic

(5)

Whichoneamongthefollowingisnotpartofthestepsinpersonalriskmanagement: (a) Riskcontrol (b) Analysisofrisks (c) Risktransfer (d) Riskfinancing

(6)

Identifytheoddmanoutinthefollowinglistofelementsrequiredforavalidinsurancetransaction: (a) Premiumpayment (b) Reinsurancearrangementstipulation (c) Contractualagreement (d) Benefitpaymentstipulatedoncontingency.

(7)

Alifeinsurancecontractisprincipallybasedonthe: (a) PrincipleofSubrogation (b) PrincipleofIndemnity (c) PrincipleofUtmostGoodFaith (d) PrincipleofWaiverandEstoppel

(8)

Paymentsmadeoutonpopularmediclaimsplansismostlybasedonthefollowingprinciple: (a) PrincipleofIndemnity (b) LawofLimitation (c) PrincipleofAdhesion (d) PrincipleofInsurableInterest

(9)

Whichamongthefollowingisnotapartoftheessentialsofinsurableinterest: (a) Theremustbelifeorlimb,property,potentialliability,rightsorfinancialinterestcapableofbeing covered. (b) Suchlifeorlimbetcin(a)abovemustbethesubjectmatteroftheinsurance. (c) Theinsuredmusthaveadequatefinancialresourcestopaythepremium. (d) Theinsuredmustbeinalegallyrecognisedrelationshipwiththesubjectmatterofinsurance.

(10) IntheIndiancontext,whichoneofthefollowingrelationshipdoesnotsatisfy thecriteriaofinsurable interest principle: (a) Husbandonwifeslifeandviceversa. (b) Debtoroncreditorslife (c) Parentonthechildslife (d) Businesspartneronthelifeofthepartner (11) TheDoctrineofAdhesionprotects: (a) Theinsured (b) Theinsurer (c) TheIRDA (d) Noneoftheabove

(12) Obligationsundertheprincipleofutmostgoodfaithrestonthe: (a) Proposeronly (b) Insureronly (c) Boththeproposerandtheinsurer (d) Onneither (13) Theprincipleofutmostgoodfaithplacesoneachpartytothecontracttheobligationtodiscloseallmaterial factstoeachother.Whichoneofthefactsreferredtobellowsdoesnotfallintothecategoryofmaterialfact: (a) Proposersvocationhobbyetc (b) Proposerspersonalmedicalhistoryandprofile (c) Proposersparentsoccupationalstatus (d) Proposersfamilyhistory. (14) Whiletakingoutalifeinsuranceproposal,theproposerdisclosedthatafewyearsbackhehadsufferedformpain inhisliverbutnowatthetimeoftheproposal,hewasfreefromthecomplaint.Theinsureracceptedtheassurance atordinaryratesasproposed.Subsequentlytheassuredpassedawaywithinabouttwoyearsoftakingoutthe policy.Oninvestigationofthedeathclaimitwasdiscoveredthattheassureddiedofcirrhosisoftheliver.The insurancecompanyrepudiatedtheclaim.Theclaimantsoughtlegalredressandthecourtsetasidetheinsurance companysactionofrepudiationonthegroundsofalegalprincipleasarguedbytheclaimant.Itwastheprinciple of: (a) Representation (b) Warranty (c) Utmostgoodfaith (d) Waiverandestoppel (15) OneofthelinesofbusinessmentionedbelowisnotpartofthelifeinsurancebusinessinIndia.Whichone? (a) Annuities (b) Suprannuation (c) Mediclaim/healthcover (d) Disabilitycover (16) ExceptforoneitembelowtheIRDAisconcernedwiththerest.Whichone? (a) Adequatereturnoncapitalonalifeinsurancecompanysinvestments (b) Protectiontopolicyholders (c) HealthyCompetition (d) Promptcontractualliabilityredemptionbytheinsurers. (17) The minimum paid up capital requirement for an insurance company to function as a reinsurance operator accordingtotheIRDAis: (a) Rs.100Crones (b) Rs.200Crones (c) Rs.125Crones (d) Rs.75Crones (18) TheSectionintheInsuranceActwhichregulatestheinvestmentactivitiesofanInsuranceCompanyis:

(a) Section45 (b) Section27 (c) Section17 (d) Noneoftheabove (19) Section32Band32CoftheInsuranceActstipulatesconditionswithregardto: (a) Minimumruralsectorbusinesstransactedbyaninsurancecompany. (b) MinimumsolvencyrequirementsofaninsuranceCompany. (c) Provisionregardingintermediaries. (d) ForeignbusinessprovisionofIndianInsurancecompanies. (20) OneamongthefollowingisnotpartoftheobjectivesoftheIRDAAct,1999: (a) Toprotecttheinterestofpolicyholders. (b) Toregulateandpromotethegrowththeinsuranceindustry. (c) Tobringaboutconvergenceofallthegovernmentfinancialinstitutionswithinsurancecompanies. (d) TosuitablyamendtheInsuranceAct,1938

(21) UnderSection25oftheIRDAAct,theInsuranceAdvisoryCommitteeshallhaveamembershipof: (a) 25 (b) 11 (c) 10 (d) 15 (22) Aregisteredinsurancebrokeris: (a) Theinsurersrepresentative (b) Theinsuredsrepresentative (c) Remuneratedonsalarybasisbytheinsurer. (d) Afirmdealingonlywithoneinsurancecompanysproducts. (23) AspertheIRDAActthesolvencymargintobemaintainedbyabrokerthroughabankguaranteeis: (a) Rs2lacs (b) Rs50,000 (c) Rs1lac (d) Rs75,000 (24) ThetimelimitgrantedbytheIRDAtotheproposertoreviewthetermsandconditionsofthepolicyafterreceiptof thepolicybondis: (a) 21days (b) 15days (c) 7days (d) Noneoftheabove

(25) Thedecisiontoacceptorrejectalifeinsuranceclaimafterreceiptofallrequirementsattheinsuranceofficeis: (a) 30days (b) 15days (c) 21days (d) 10days (26) The provision inthe Insurance Act which deals withthe incontestability ofaninsurance policy angrounds / misstatementorconcealmentaftertheexpiryoftwoyearsiscoveredby (a) Section27 (b) Section47 (c) Section45 (d) Section11 (27) Thefunctionofanunderwriterinaninsurancecompanyisto: (a) Todeterminethemaximumamountofriskwhichcanbeacceptedandortransferred. (b) Classify,acceptorrejecttherisks. (c) Tofixpremiumrates. (d) Toensureprofitsfromoperations

(28) Theminimumcapitalrequirementofadirectbrokeris (a) Rs.50Lacs (b) Rs.2Crores (c) Rs.2.5Crores (d) Rs.1.5Crores (29) Thenumberofdayswithinwhichbutbeforetheexpiryoflicence,thataninsurancebrokerneedstoapplyfor renewaloflicenceis (a) 60days (b) 15days (c) 45days (d) 30days (30) TheSectionoftheInsuranceActunderwhichareanAgentslicencemaybecancelledis (a) Section42 (b) Section41 (c) Section27 (d) Section30 (31) ThenumberofhoursoftrainingrequiredforaCompositeAgent,undertheIRDARegulationsis (a) 200Hrs (b) 100Hrs (c) 150Hrs

(d) 175Hrs (32) Inrating,whatmethodisgenerallyusedwheretheunderwriterisunabletogroupthedataforratingorwhen reliablelossdataisnotavailable: (a) ClassRating (b) MeritRating (c) ScheduleRating (d) JudgementalRating (33) Ingrouplifeandhealthinsurancethismethodofratingisgenerallyused: (a) ExperienceRating (b) MeritRating (c) ClassRating (d) Alloftheabove (34) Themortalityexperienceofnewlyinsuredhealthylivesarelistedin: (a) UltimatemortalityTable (b) SelectmortalityTable (c) AggregateMortalityTable (d) DemographicMortalityTable

(35) Significantlyunderweightcasesarepoorrisksat (a) MiddleAge (b) YoungAge (c) Always (d) Noneoftheabove (36) Theinsurancecompanysservicingofficeshouldrespondandattendto/customerrequests/requirementsunder IRDAregulations,within: (a) 15days (b) 7days (c) 10days (d) 21days (37) The maximum rate of commission payable to Agents/Advisors by the insurance companies for the first year, second&thirdyearandsubsequentyearsofpremiumpaymentsare:( a) 25%,10%and7% (b) 15%,15%and10% (c) 20%,15%and12% (d) 35%,7.5%and5% (38) AsperIRDARegulations,everyinsurancecompanyshallfollowthestandardsofprofessionalconductprescribed bythe (a) AdvertisingAgenciesAssociationofIndia

(b) PressCouncilofIndia (c) AdvertisingStandardsCouncilofIndia (d) InformationandBroadcastingMinistry,GOI. (39) Ageandlifeexpectancyare: a) Converselyrelated (b) Inverselyrelated (c) Notrelated (d) Noneoftheabove (40) Lifeexpectancyis: (a) Theaveragenumbersofyearsofremaininglifethatapersonhas (b) ThedemographicprofileofalifeasperthelatestCensus. (c) Thenumberofyearsanadultmaleisexpectedtoliveasperinsurersexperience. (d) Noneoftheabove. (41) Whichofthefollowingstatementsistrue: (a) Malesenjoybetterlongevitythanfemales (b) Maleandfemalelongevityprofilejustaboutthesame (c) Femaleshavegreaterlifeexpectancythanmales (d) Longevityprofileofsexesdonotfollowanypattern

(42) Inthecaseofanoverthe40clients,thefollowingprotectionneedisnotthatimportant: (a) Personalprotectioncoverage (b) Educationneedscoverage (c) Propertyprotectioncoverage (d) BusinessEstateprotectioncoverage (43) Forincomeprotectioninsurance(availableinadvancedmarkets)thecoverprovidedisusually (a) 90%oftheincome (b) 80%oftheincome (c) 60%oftheincome (d) 75%oftheincome (44) Oneiteminthefollowinglistisnotconsideredashorttermliability (a) Creditcarddebt (b) Educationloan (c) Hirepurchase (d) Personalloan (45) ThefamilyhistoryofMr.Kumar,30years,overweight,revealedthathisfatherdiedatage50years(accident)and motherdiedatage60years(heartfailure).Wouldyouconsiderthefamilyhistoryprofile (a) Significant (b) Ignorable

(c) TotheextentofMr.Kumarsoverweight (d) Noneoftheabove (46) Oneamongthefollowinglifeinsuranceplansiscomparabletothepropertyandcasualtyinsurance(nonlife); whichone? (a) Termlifeassurance (b) Moneybackassurance (c) Endowmentassurance (d) Variableuniversallifeassurance (47) Increasingbenefittermassurancepolicyisanexampleof (a) Renewability (b) Indexlinking (c) ReentryOption (d) Nonforfeiturerights (48) Mortgageredemptionpoliciesareexamplesof (a) Increasingtermassurance (b) Decreasingtermassurance (c) Constanttermassurance (d) Wholelifeassurance

(49) Thecoreconceptbehindlevelpremiumapproachis: (a) Bunchingofpremium (b) Averagingofpremium (c) Indexingofpremium (d) Steppingupofpremium (50) Ofthefollowing,oneisnotamongthebenifitsofVarishtPensionBimaYojana(VPBY) (a) Pensionduringthelifetimeofthepensioner (b) MinimumPensionRs.250/MaximumRs.2000/permonth (c) Returnofthepurchasepricetonomineeifpensionerdies (d) Pensionpayableonlybymonthlymode (51) OneinthefollowingisnotamongeligibilityconditionsforVPBY: (a) Permissibleofagegroup5579years (b) Premiumsfromownsavingsbycheque,d/d (c) Pensionpaymentsareagerelated (d) Ageproofamust. (52) Thesumassuredreceivedunderanypolicyistaxableif (a) Thepremiumpayableexceeds20%ofthesumassured (b) Ifitexceeds30%

(c) Ifitexceeds15% (d) Ifitexceeds12.5% (53) Underajointlifelastsurvivorannuity: (a) Annuitypaymentstopsonthefirstdeathofthecoveredlives (b) Annuityispayableaslongaseitheroneoftheaannuitantisalive (c) Annuityispayableonlytotheannuitantspecified. (d) Noneoftheabove. (54) Whenyoubuyanannuitywithasingleinstallmentpurchasepriceyouget (a) Anindexedlinkedannuity (b) Avariableannuity (c) Adeferredannuity (d) Animmediateannuity (55) Anannuitycontractwhosecashvaluesandbenefitpaymentsarerelatedtoassetsallocatedis (a) Lifeannuitywithguarantee (b) AnnuityCertain (c) Variableannuity (d) Fixedannuity

(56) Thecoolingoffperiodforalifeinsurancepolicyis (a) 15days (b) 21days (c) 10days (d) 7days (57) Theconditionunderwhichtheinsurermaynothonourtheliabilityunderapolicyissetoutinthe (a) Scheduleofthepolicy (b) Forfeitureclause (c) Titleprovision (d) Noneoftheabove (58) Inthecaseofdisabilitybenefitpayment,oneofthefollowingstatementsisnottrue: (a) Thisriderprovidesforpaymentsofaregularstreamofincome (b) Thebenefitpaymentmaylastforsay,10years (c) Iftheassureddiesbeforeallthestipulatedinstallmentpaymentscompletednofurtherbenefit willbepayable (d) In(c)/above,thereisaprovisionforpaymentofalumpsum(whichisthesumtotalofunpaid installments).

59.

Guaranteedinsurabilityoptionriderisoperationalwhereyou (a) Needtochangeyoucurrentinsuranceplan. (b) Needtobuyadditionalinsurance. (c) Needtoextendcovertospouse. (d) Noneoftheabove.

60.

OneofthefollowingstatementsdoesnotapplytotheHumanLifeValueapproachindetermininghowmuch insuranceoneneeds: (a) HLVisthesourceofallincomeandwealth. (b) HLVistheconnectinglinkbetweengenerations. (c) HLVaccountsfortheadditionalincomestreamflowarisingfromtheindividualscareerprogress. (d) FamilyisaneconomicpartnershiporganizationwovenaroundtheHLVofitsmembers.

61.

OneofthefactorslistedbelowdoesnotentertheHLVcalculations:( a) Premiumpaidonspouseslife. (b) Selfmaintenancecharges. (c) TaxesPayable (d) GrossTotalIncome

62.

The financial gapinfunds requiredisthe focusofone ofthe following methodsofascertaininghowmuch insuranceisneeded. (a) HumanLifeValueapproach (b) CapitalRedemptionapproach (c) Multipleapproach (d) Needbasedapproach

63.

Afamilysinsuranceneedsarethemostwhere: (a) Afamilyisjustfounded. (b) Wherechiefearnerisretiring. (c) Wherethechildrenareveryyoung. (d) Noneoftheabove.

64.

Theprincipleofutmostgoodfaithwillbemostrelevantatthetimeof (a) Issuingthepolicy (b) Settlingclaim (c) Underwritingtherisk (d) Noneoftheabove.

65.

Whichoneofthefollowingstatementsisnottrue: (a) Standardmortalityisconsideredtohaveavalueof100% (b) Ratableimpairmentisexpressedasanadditiontoextramortality. (c) Standardornormalmortalitydoesnotaccountforfavourablefeatures. (d) Favorablemortalityfactorsareexpressedassayminus50%tostandardmortality.

66.

Inmedicalunderwriting,whichoneofthefollowingstatementisnottrue:

(a) Incasesofmildorminoralcoholconsumptionwithoutsignsofdiseaseconditions,asmallextra premiumischarged. (b) Essentialhypertensionmaybebecauseofrenaldiseaseorobesity. (c) Chestpainmayindicateignorablemusculartwingesorheartproblem. (d) Treatedulcersdonotgreatlyaffectmortality. 67. Diabetesiscausedbytheinadequatefunctioningof (a) Spleen (b) Kidney (c) Pancreas (d) Pitutorygland 68. Whiledealingwithrisksfromhazardoushobbiesorpastimessuchrisksaretreatedbyinsurancecompaniesby (a) Excludingtherisk (b) Chargingextrapremium (c) Ignoringitandtreatingaspartofthegeneralpoolofrisks (d) Alloftheabove 69. Oneofthefollowingfactorsisnotconsideredimportantfromanunderwriterspointofview. (a) Age (b) Sex (c) Occupation (d) Familyincome

AnswertoMockTest4
1 7 (d) (c) 2 (d) 8 (a) 14 (d) 20 (c) 26 (c) 32 (d) 38 (c) 44 (b) 50 (d) 56 (a) 62 (d) 68 (d) 3 (c) 9 (c) 15 (c) 21 (a) 27 (b) 33 (d) 39 (b) 45 (c) 51 (c) 57 (b) 63 (c) 69 (d) 4 (c) 10 (b) 16 (a) 22 (b) 28 (a) 34 (b) 40 (a) 46 (a) 52 (a) 58 (c) 64 (c) 5 (d) 11 (a) 17 (b) 23 (b) 29 (d) 35 (b) 41 (c) 47 (b) 53 (b) 59 (b) 65 (c) 6 (b) 12 (c) 18 (b) 24 (b) 30 (a) 36 (c) 42 (b) 48 (b) 54 (d) 60 (c) 66 (b)

13 (c) 19 (a) 25 (a) 31 (c) 37 (d) 43 (d) 49 (b) 55 (c) 61 (a) 67 (c)

Mock Test -5
1. Theprocessofduediligenceconductedbyaninsuranceagentisknownas______. a. b. c. d. 2. Underwriting Investigation Inspection Sitecheck (1Mark) (1Mark)

WhichtypeofinsuranceisnoteasilyavailableinIndia? a. b. c. d. OfficersLiability DisabilityIncomeProtection Health Life

3.

InsurableInterestcanexistbetweenaMemberofParliamentandhis(unrelated) partyworkers.

(1Mark)

a. b. c. 4.

True False Datainsufficient (1Mark)

Apersonovertheageof60generallyrequires_______Insurancemoreurgently. a. b. c. Life ProfessionalIndemnity LongtermCare

5.

Insurancebrokersaregovernedby_________ a. b. c. IRDA SEBI BothIRDA&SEBI

(1Mark)

6.

ThirdPartyAdministratorsdirectlyreimbursethePolicyholdersforanyexpensesincurred. a. b. c. True False DataInsufficient

(1Marks)

7.

Ayoungunmarriedindividual(aged2023years)withnodependentsshouldideally optforthefollowinginsurancefirst. a. b. c. Property Life Health

(1Mark)

8.

AsperIRDA,theincontestableclausecomesintoeffectafter____years. a. b. c. d. 2 3 4 5

(1Mark)

9.

Householderscoverdoesnotincludedamage/lossto_______. a. b. c. d. Building HomeContents Burglary Jewelry

(1Mark)

10.

Aninsurancecontractisanaleatorycontract a. b. True False

(1Mark)

11.

______________insuranceisaTariffProduct. a. Life

(1Mark)

b. c. 12.

Health Motor (1Mark)

AnInsuranceAgentmustdisclosehis/hercommissiontotheclientinanupfrontmanner. a. b. True False

13.

InsuranceContractsadheretoPrincipleslaiddowninthe_____________. a. b. c. ContractAct SecuritiesContractsRegulationAct IRDAAct

(1Mark)

14.

TheapplicationofthelawofContractdoesnotapplyto______contracts. A.Insurance;B.Stockmarket;C.PropertyDeals a. b. c. d. A B C Noneofthem (2Marks)

15.

Insurancecanbe________contracts. A.Benefit;B.Indemnity;C.Negotiated a. b. c. EitherBorC OnlyA OnlyB (2Marks)

16.

RaminsureshishomeworthRs.50lakhsforRs.30lakhs.Thehouseisdestroyedinafire andhesufferslossesworthRs.20lakhs.HowmuchwillhereceivefromtheInsurance Company? a. b. c. 20lakhs 16lakhs 12lakhs

(2Marks)

17.

Abraham,30yearsandmarried,worksforafirmwhichprovideshimwithmedicalcover.Healreadyhashisown homeandsavingsofRs.42lakhswhicharewellinvested.Inthenexttwentyyearshewillbeabletosaveup enoughtofundhisretirementandhischildrenseducation.Whichofthefollowingmightbethemostimportant insuranceforhim? (2Marks) a. b. c. d. MedicalCover TemporaryTotalDisablementCover PropertyInsurance LifeCover

18.

Thefollowingisnotaprincipleessentialforavalidcontract: A.Offerandacceptance B.Consideration C.Coercedconsentsareacceptable. a. b. c. OnlyB A&C OnlyC (2Marks)

19.

Wheneveraninsurerpartlyreinsurestheriskwithareinsurer,itisacaseof; A.RiskRetention B.RiskTransfer C.RiskAvoidance a. b. c. d. A&B A B B&C (2Marks)

20.

Twowaysofassessinglifeinsuranceneedsisaneedbasedapproachandtheotheristheincomereplacement method.WhatinyourjudgementwouldbethelifecoverrequiredforMr.Joshionthebasisofeachofthetwo approaches.Mr.Joshiisthesoleincomeearnerinthefamily.Mrs.Raoisahomemaker.Theyareaged40and36 respectively.Lifeexpectancyforbothofthemisanother40years.Theyhavenochildren.Otherinformationyou haveis:CurrentinvestmentportfolioRs.20lakh.;EstimatedfinalExpensesRs.1lakh.;Presentannualexpenses Rs.4lakh(includingalakhofMr.Raospersonalexpenses);Mr.RaosposttaxincomeinhandRs.3.5lakh.; Assumeaposttax,postinflationreturn/discountingfactorof3%..Calculatetheinsurancerequirementunder theNeedsBasedmethod. (4Marks) a. b. c. d. Rs.14.2lakhs Rs.14.8lakhs Rs.15.80lakhs Rs.15.4lakhs

21

Agroupof50000personseachaged35yearswishestoapplyforTermInsuranceforaoneyearperiodforasumof Rs.2lakhs.Ifthemortalitytablesshowthatoutof50lakhpeople30000diewithinayear,findthepremiumtobe paidbyeachofthe50000applicants. (4Marks) a. b. c. d. 1250 1300 1350 1200

Answers to Mock Test-5

1. 2. 3. 4. 5. 6. 7. 8. a. b. c. c. a. b. d. a. Underwriting DisabilityIncomeProtection False LongtermCare IRDA False Health 2

9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

a. a. c. b. a. d. a. c. d. c. a. d.

Building True Motor False ContractAct Noneofthem EitherBorC 12lakhs LifeCover Conly A&B Rs.15.4lakhs

WorkingNote:FamilysexpensesafterdeathofMr.JoshiwillfalltoRs.3lakhs.FindFuturevalueoftheseexpensesfor 40yearswithinflationat4%.HenceFuturevalueisRs.14.40lakhs.AddRs.1lakhasFinalexpenses.HenceInsurance requirementwillbeRs.15.40lakhs. 21. d. 1200 WorkingNote:Mortalityrate=30000/5000000=0.06;No.ofpersonsinthegroupwhoarelikelytodieinayear= 50000*0.06=300;thetotal amountofclaimpayable200000*300=6000000;Premiumperperson=6000000/50000=Rs.1200.

Mock Test - 6
1. AccordingtoIRDAregulationforInsuranceBroker a. b. c. 2. Brokercandoanyotherbusinesshewants Brokercannotdoanyotherbusiness BrokercandoanyotherbusinessuponpriorapprovalfromIRDA

HealthInsuranceisatariffproduct. a. b. True False

3.

Thelimitforaclaimthatcanbeacceptedbyaninsurancecompanywithoutdeputingasurveyororlossassessor is

a)Rs5,000b)20,000c)50,000d)10,000e)10,000 4. isawillsubstitute a. b. c. 5. endowmentpolicy TestamontaryTrust Tenancyincommon

After9/11thefollowingriskcoveragewereexcludedbytheinsurancecompanies a. b. c. d. Political WarStrikes Sabotageandterrorism warstrikes/riots/sabotageandterrorism

6.

Reinsuranceis a. b. c. d. aninsurancecompanyinsuringotherinsurancecompaniesbusiness atreatyforfutureinsurance Coinsurance facultativeinsurance

7.

IndianinsurancecompanyreinsureswithanreinsurerwhoseheadofficeisinGermany.Incaseofadisputewhat lawswillapply? a. b. c. d. Indianlaw Germanlaw Boththecountryslaw Internationallaw

8.

WhatisthemostprominentfeatureofaTPA a. b. c. cashlesstransaction easeofmanagement bettercustomerservice

9.

There are 5000 people in a village. They want to get insured for a sum assured of Rs 2 lakhs. If the mortality rate is .004, what is the natural premium?
a. c. d. 40,00,000 8,00,000 40,000 10,000 b.

Answers to Mock Test-6

1. b. Brokercannotdoanyotherbusiness

2. 3. 4. 5. 6. 7. 8. 9.

b. b. a. c. a. d. a. a.

False 20,000 endowmentpolicy Sabotageandterrorism aninsurancecompanyinsuringotherinsurancecompaniesbusiness Internationallaw cashlesstransaction 40,00,000

Mock Test - 7
1. Riskofnotrealizingthedesiredreturnfromaninvestmentconstitutes a Purerisk b Speculativerisk c Financialrisk d Nonfinancialrisk

Ans. c 2. Who will share the premium (level), given the number of persons to be insured and the number of persons expectedtodieinthegivenperiodforthesumassured? a No.ofpersonstobeinsured b No.ofpersonsexpectedtodie c Survivors d Noneoftheabove

Ans. c 3. HLV=HumanLifeValue=(EM)anwhereEisthetotalearningsp.a.andM isthemaintenanceexpensesofanindividual&nistheperiod.Theabovepresentvalueiscalculatedtaking(E M)at a Endofeachyear b Middleofeachyear c Beginningofeachyear d Immaterialwhatpointoftimeistaken

Ans. c 4. Deathdisabilityliabilityare a Purerisks b Financialrisks c Both d None

Ans. c 5. Risktransfer&riskretentionarepartof a Riskfinancial b RiskManagement c RiskControl d Noneoftheabove Ans. b 6 Insuranceoperateson a Lawoflargenumbers b Lawofprobability c Both d None Ans. c 7. Insuranceisacontractofutmostgoodfaithandisalsocalled________________

Ans. Uberrimafides 8. Canthetermsofaninsurancecontractbechangedby a Issueofaletter b Anyothermeansofcommunication c Placinganendorsementonpolicybond d Cannotbechanged

Ans. c 9. Twocompaniesinsuringasinglesubjectmatterisaformof a Reinsurance b Coinsurance c Both d None

Ans. b

10.

Oneofthefollowingdoesnotconstituteinsurableinterest a b c d Fatherson Creditordebtor HusbandWife Studentteacher

Ans. b 11. Annuitiesarereverseoflifeinsurance. True/False Ans. True 12. Numericalratingsystemisusedby a Actuary b Underwriter c Both d None Ans. B

Practice Questions
1. Themoneyinsurancepolicyisdesignedtocoverthe a. Riot&Strike b. Lossofmoneyintransitinthehandsofinsured'semployeebillcollectors. c. Lossduringpaymentofwages. d. Lossdueto"holdup"risks Ans. (b) 2. Whichtypeofthefollowingfidelityguaranteepoliciesissuitabletoaninsuredwhofearsthatmorethanone employeemayactincollusionandcausealoss? a.Floating b.Collective

c.Individual d.Group Ans. (a) 3. Underwhichofthefollowingextensionsis'not'providedforWorkmen'sCompensationTariff? a. Contractor'sWorkmen b. Damagetopersonaleffectsofworkmenkeptinthefactory c. DiseasesspecifiedintheAct d. Medicalexpenses Ans. (b) 4. Whichofthefollowingcontingenciesis'not'coveredunderpersonalaccidentalpolicy? a. Permanenttotaldisablement b. Temporarytotaldisablement c. Permanentpartialdisablement d. Temporarypartialdisablement Ans 5. (d) Claimformsarenotcompulsorilyusedin___________ a. Fidelityguarantees b. Marinecargo(exports/imports) c. Machinerybreakdown d. Bankersblanket Ans: (b) 6. Whichofthefollowingdocumentsisnotrelevanttobodilyinjuryclaimsforprocessingthirdpartyclaimsunder motorpolicies? a. Medicalcertificate b. Coroner's(postmortem)report c. Drivinglicense d. Policereport Ans: (b) 7. TheMediclaimpolicyisavailableuptoamaximumsuminsuredofRs____lakh a. 5 b. 2 c. 3 d. 4 Ans: (a) 8. ThepremiumunderMediclaimpolicyisnotrelatedto a. Age b. Job c. Historyofprevioussurgery d. Sex

Ans: (d) 9. Undergrouppersonalaccidentpolicies,'onduty'coverisavailableat___%ofthenormalpremium. a. 60 b. 75 c. 25 d. 50 Ans. (b) 10. Whichofthefollowingiscorrectmeaningofsumassuredundermajorityofpolicies? a. Fairvalueofsubjectmatterofinsurance b. Agreedvalueofpropertyinsured c. Theamountpaidwhenthereisatotalloss d. Themaximumlimitofliabilityunderthepolicy Ans:(d) 11. TheinsuranceunderOverseasMedicalpolicydoesnotoperatebeyond____daysofcontinuousabsencefromIndia a. 120 b. 180 c. 60 d. 90 Ans: (b) 12. UnderthepersonalAccidentPolicy,weeklybenefitsarepaidsubjecttoamaximumperiodof______weeks. a. 100 b. 104 c. 52 d. 75 Ans: (a)

13.

IncaseofaFireDeclarationPolicy,ifsuminsuredRs1crore,RateofpremiumRe.1permille,andaverageof MonthlyDeclarationRs60lakh.CalculateprovisionalPremiumandrefundofPremium. a. Rs.9,000,Rs.5,000 b. Rs.10,000,Rs.4,000 c. Rs.7,000,Rs.7,000 d. Rs.8,000,Rs.6,000

Ans: (b) Hint:permillemeansperthousand.Provisionalpremium=1crx1/1000=10000 Refundofpremium=10000(60lacx1/1000)=4000 14. Whichofthefollowingstatementsistrue?

StatementA:ElectronicEquipmentpolicycoverselectricalormchanicalbreakdownoftheinsureditem. StatementB:ElectronicEquipmentpolicycoversdamagecausedbyfailureofelectricitysupply. a. Neitherofthestudents b. StatementAonly c. StatementBonly d. BothStatements Ans: (d) 15. Outof400houses,eachvaluedatRs.20,000/,4housesgetburnt(onanaverage)everyyear.Whatshouldbethe contributionofeachownertopayforthelossesof4houses? a. Rs.800 b. Rs.200 c. Rs.400 d. Rs.600 Ans: (b) Hint: 20000x4/400=200 16 CalculatethetotalpremiumpayableundertheCollectivefidelityGuranteePolicyfor. a. Rs.2,750 b. Rs.3,000 c. Rs.1,700 d. Rs.2,500 Ans. (a) Hint: (100000x.75)+(200000x1) 17. ApolicywithasuminsuredofRs1lakhissubjecttoa'franchise'orRs.10,000.Whatistheamountofclaimpayable, ifthelossisRs.8,000? a. Rs.2,000 b. Rs.10,000 c. Rs.18,000 d. Nil Ans.(d)

ACashierRs.1lakhRate0.75%andanaccountantRs.2lakhRate1.00%

18. WhichofthefollowingstatementistrueinrelationtoGroupMediclaimPolicy? StatementA:CumulativeBonusisnotavailable StatementB:Healthcheckupexpensesarenotpayable a. Neitherofthestatement b. StatementAonly c. StatementBonly d. Bothstatements Ans. (d) 19. TheStandardFireandSpecialperilsPolicycoversworksofartforanamount'not'exceedingRs._________________

a. 20,000 b. 10,000 c. 5,000 d. 15,000 Ans. (b) 20. WhatistheamountofclaimpayableiflossisRs15,000incaseofapolicywithsumassuredRs.1lakhandexcess clauseRs.10,000? a. 2,000 b. 5,000 c. 3,000 d. 4,000 Ans. (b) 21. CalculatetheextrapremiumpayableonexpiryofthepolicyincaseMoneyintransitPolicy,ifestimatedamountas perproposalis10lakh,actualamountasperdeclarationis12lakhandrateofpremiumisRe.1permille. a. Rs.200 b. Rs.1000 c. Rs.1200 d. Rs.500 Ans. (a) Hint: (12lac10lac)x1/1000 22 Outof1000pedalcycles,eachvaluedatRs.2000,5arestolenonanaverageeveryyear.Therateofpremiumfor eachpedalcyclein%maybeindicated. a. 5 b. 10 c. 50 d. 0.5 Ans. (d) Hint: premiumpercycle=2000x5/1000=Rs.10 Rateofpremium=10/2000=0.5 23. Whichofthefollowingfidelityguaranteepoliciesisautomaticallycancelledonpaymentofloss. a. FloatingPolicy b. IndividualPolicy c. PositionPolicy d. BlanketPolicy Ans. (b)

24.

Whichofthefollowingis'not'consideredasamaterialfact? a. TheInsuredhadcancelledhispolicy. b. ThepreviousInsurerhadcancelledthepolicy. c. ThepreviousInsurerhadrejectedtheproposal. d. ThepreviousInsurerhadrefusedtorenewtheproposal. Ans. (a) 25. Whichofthefollowingcoverissuitableforregularexport/importshipments? a. Opencover

b. Annualpolicy c. Dutyinsurance d. SpecialDeclarationPolicy Ans. (a) 26. AccordingtoFireTariff,whichofthefollowingcannotbecoveredundervaluedpolicy? a. Obsoletemachinery b. Workofart c. Brandnewmachinery d. Curios Ans(c) 27. WhichofthefollowingrisksisnotcoveredunderBankersBlanketpolicies? a. Dishonestyofappraisers b. Tradinglosses c. Fire d. Criminalactsofemployees (b)

Ans 28.

Asperlawpremiumcollectedbyanagentshallbedepositedwiththeinsurer_________. a. Thesameday b. Within24hours c. Within48hours d. Within7days Ans.(b) 29. CalculatetherefundpayableonexpiryofthepolicyincaseMoneyinTransitPolicy,ifestimatedamountasper proposalis20lakh,actualamountasperdeclarationis12lakhandrateofpremiumisRe.1permille. a. Rs.800 b. Rs.1000 c. Rs.1200 d. Rs.500 Ans. (a) Hint: (20lac12lac)x1/1000.

Sample Questions
1. Theprocessofduediligenceconductedbyaninsuranceagentisknownas___ a. b. c. d. Underwriting Investigation Inspection Sitecheck (1Mark)

2.

WhichtypeofinsuranceisnoteasilyavailableinIndia? a. b. c. d. OfficersLiability DisabilityIncomeProtection Health Life

(1Mark)

3.

InsurableInterestcanexistbetweenaMemberofParliamentandhis(unrelated) partyworkers. a. b. c. True False Datainsufficient

(1Mark)

4.

Apersonovertheageof60generallyrequires_______Insurancemoreurgently. a. b. c. Life ProfessionalIndemnity LongtermCare

(1Mark)

5.

Insurancebrokersaregovernedby_________ a. b. c. IRDA SEBI BothIRDA&SEBI

(1Mark)

6.

AsperIRDARegulations,areinsurancebrokermusthaveaminimumpaidupcapitalof INR_____lakhs. a. b. c. 250 200 50

(1Mark)

7.

ThirdPartyAdministratorsdirectlyreimbursethePolicyholdersforanyexpensesincurred. a. b. c. True False DataInsufficient

(1Marks)

8.

Ayoungunmarriedindividual(aged2023years)withnodependentsshouldideallyoptforthefollowing insurancefirst. (1Mark) a.Property b.Life c.Health

9.

AsperIRDA,theincontestableclausecomesintoeffectafter____years. a. 2 b. 3 c. 4 d. 5 Householderscoverdoesnotincludedamage/lossto_______.

(1Mark)

10.

(1Mark)

a. b. c. d. 11.

Building HomeContents Burglary Jewelry (1Mark)

Aninsurancecontractisanaleatorycontract. a. True b. False ______________insuranceisaTariffProduct. a. Life b. Health c. Motor AnInsuranceAgentmustdisclosehis/hercommissiontotheclientinanupfrontmanner. a. True b. False InsuranceContractsadheretoPrincipleslaiddowninthe_____________. a. ContractAct b. SecuritiesContractsRegulationAct c. IRDAAct TheapplicationofthelawofContractdoesnotapplyto______contracts. Insurance;B.Stockmarket;C.PropertyDeals a. A b. B c. C d. Noneofthem Insurancecanbe________contracts. Benefit;B.Indemnity;C.Negotiated a. EitherBorC b. OnlyA c. OnlyB

12.

(1Mark)

13.

(1Mark)

14.

(1Mark)

15. A.

(2Marks)

16. A.

(2Marks)

17.

RaminsureshishomeworthRs.50lakhsforRs.30lakhs.Thehouseisdestroyedinafireandhesufferslosses worthRs.20lakhs.HowmuchwillhereceivefromtheInsuranceCompany? (2Marks) a. 20lakhs b. 16lakhs c. 12lakhs

18.

Abraham,30yearsandmarried,worksforafirm,whichprovideshimwithmedicalcover.Healreadyhashisown homeandsavingsofRs.42lakhs,whicharewellinvested.Inthenexttwentyyearshewillbeabletosaveup enoughtofundhisretirementandhischildren.seducation.Whichofthefollowingmightbethemostimportant insuranceforhim? (2Marks) a. MedicalCover b. TemporaryTotalDisablementCover

c. d. 19.

PropertyInsurance LifeCover

Thefollowingisnotaprincipleessentialforavalidcontract: A. Offerandacceptance B. Consideration C. Coercedconsentsareacceptable. a. OnlyB b. A&C c. OnlyC Wheneveraninsurerpartlyreinsurestheriskwithareinsurer,itisacaseof; A. RiskRetention B. RiskTransfer C. RiskAvoidance a. A&B b. A c. B d. B&C

(2Marks)

20.

(2Marks)

21.

Twowaysofassessinglifeinsuranceneedsisaneedbasedapproachandtheotheristheincomereplacement method.WhatinyourjudgmentwouldbethelifecoverrequiredforMr.Joshionthebasisofeachofthetwo approaches.Mr.Joshiisthesoleincomeearnerinthefamily.Mrs.Joshiisahomemaker.Theyareaged40and36 respectively.Lifeexpectancyforbothofthemisanother40years.Theyhavenochildren.Otherinformationyou haveis:CurrentinvestmentportfolioRs.20lakh;EstimatedfinalExpensesRs.1lakh.;Presentannualexpenses Rs.4lakh(includingalakhofMr.Joshi'spersonalexpenses);Mr.Joshi'sposttaxincomeinhandRs.3.5lakh.; Assumeaposttax,postinflationreturn/discountingfactorof3%..Calculatetheinsurancerequirementunder theNeedBasedmethod. (4Marks) a. Rs.46.50lakhs b. Rs.75.10lakhs c. Rs.69.50lakhs d. Rs.50.35lakhs Agroupof50000personseachaged35yearswishestoapplyforTermInsuranceforaoneyearperiodforasumof Rs.2lakhs.Ifthemortalitytablesshowthatoutof50lakhpeople 30000diewithinayear,findthepremiumtobepaidbyeachofthe50000applicants. (4Marks) a. 1250 b. 1300 c. 1350 d. 1200

22.

Solutions
1. 2. a. b. Underwriting DisabilityIncomeProtection

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

b. c. a. b. b. c. a. a. a. c. b. a. d. a. c. d. c. a. d.

False LongtermCare IRDA 200 False Health 2 Building True Motor False ContractAct Noneofthem EitherBorC 12lakhs LifeCover Conly A&B Rs.15.4lakhs

WorkingNote:Family.sexpensesafterdeathofMr.JoshiwillfalltoRs.3lakh(4Lakhatpresentless1LakhofMr. Joshi.spersonalexpenses)for40years.At3%discountthepresentvalueof3Lakhforhisnext40yearsis69.35 Lakh.Currentinvestmentis20Lakh+funeralcostwillbe1Lakh.Mr.Joshi.sInsurancewillbe(69.35.20+1)= 50.35Lakh. 22. d. 1200

WorkingNote:Mortalityrate=30000/5000000=0.06;No.ofpersonsinthegroupwhoarelikelytodieinayear= 50000*0.06=300;thetotalamountofclaimpayable200000*300=6000000;Premiumperperson=6000000/50000= Rs.1200.