IC 33 Question Bank

Question Bank from IC 33 2015
CHAPTER 1
INTRODUCTION TO INSURANCE
Question 1
Risk transfer through risk pooling is called ________.

I. Savings
II. Investments
III. Insurance
IV. Risk mitigation
Question 2
The measures to reduce chances of occurrence of risk are known as _____.

I. Risk retention
II. Loss prevention
III. Risk transfer
IV. Risk avoidance
Question 3
By transferring risk to insurer, it becomes possible ___________.

I. To become careless about our assets
II. To make money from insurance in the event of a loss
III. To ignore the potential risks facing our assets
IV. To enjoy peace of mind and plan one’s business more effectively
Question 4
Origins of modern insurance business can be traced to __________.

I. Bottomry
II. Lloyds
III. Rhodes
IV. Malhotra Committee
Question 5
In insurance context ‘risk retention’ indicates a situation where _____.

I. Possibility of loss or damage is not there
II. Loss producing event has no value
III. Property is covered by insurance
IV. One decides to bear the risk and its effects
Question 6
Which of the following statement is true?

I. Insurance protects the asset
II. Insurance prevents its loss
III. Insurance reduces possibilities of loss
IV. Insurance pays when there is loss of asset
IC33 LIFE INSURANCE 22
Question 7
Out of 400 houses, each valued at Rs. 20,000, on an average 4 houses get burnt every year
resulting in a combined loss of Rs. 80,000. What should be the annual contribution of each
house owner to make good this loss?
I. Rs.100/-
II. Rs.200/-
III. Rs.80/-
IV. Rs.400/-
Question 8
Which of the following statements is true?

I. Insurance is a method of sharing the losses of a ‘few’ by ‘many’
II. Insurance is a method of transferring the risk of an individual to another individual
III. Insurance is a method of sharing the losses of a ‘many’ by a few
IV. Insurance is a method of transferring the gains of a few to the many
Question 9
Why do insurers arrange for survey and inspection of the property before acceptance of a risk?
I. To assess the risk for rating purposes
II. To find out how the insured purchased the property
III. To find out whether other insurers have also inspected the property
IV. To find out whether neighbouring property also can be insured
Question 10
Which of the below option best describes the process of insurance?

I. Sharing the losses of many by a few
II. Sharing the losses of few by many
III. One sharing the losses of few
IV. Sharing of losses through subsidy
Answers to Self-Examination Questions

Answer 1
The correct option is III.

Risk transfer through risk pooling is called insurance. IC33 LIFE INSURANCE 23
Answer 2
The correct option is II.

The measures to reduce chances of occurrence of risk are known as loss prevention measures.
Answer 3
The correct option is IV.
By transferring risk to insurer, it becomes possible to enjoy peace of mind and plan one’s
business more effectively.
Answer 4

Origins of modern insurance business can be traced to Lloyd’s.
Answer 5

In the insurance context ‘risk retention’ indicates a situation where one decides to bear the
risk and its effects.
Answer 6

Insurance pays when there is loss of asset.
Answer 7

Rs. 200 per household should cover the loss.
Answer 8
The correct option is I.

Insurance is a method of sharing the losses of a ‘few’ by ‘many’.
Answer 9
Before acceptance of a risk, insurers arrange survey and inspection of the property to assess
the risk for rating purposes.
Answer 10

Insurance may be considered as a process by which the losses of a few, who are unfortunate to suffer
such losses, are shared amongst those exposed to similar uncertain events / situations.
CHAPTER 2
WHAT LIFE INSURANCE INVOLVES
Question 1
Which of the below is not an element of the life insurance business?
I. Asset
II. Risk
III. Principle of mutuality
IV. Subsidy
Question 2
Who devised the concept of HLV?
I. Dr. Martin Luther King
II. Warren Buffet
III. Prof. Hubener
IV. George Soros
Question 3
Which of the below mentioned insurance plans has the least or no amount of savings element?
I. Term insurance plan
II. Endowment plan
III. Whole life plan
IV. Money back plan
Question 4
Which among the following cannot be termed as an asset?

I. Car
II. Human Life
III. Air
IV. House
Question 5
Which of the below cannot be categorised under risks?

I. Dying too young
II. Dying too early
III. Natural wear and tear
IV. Living with disability
Question 6
I. Life insurance policies are contracts of indemnity while general insurance policies are
contracts of assurance
II. Life insurance policies are contracts of assurance while general insurance policies are
contracts of indemnity
III. In case of general insurance the risk event protected against is certain
IV. The certainty of risk event in case of general insurance increases with time
Question 7
Which among the following methods is a traditional method that can help determine the
insurance needed by an individual?
I. Human Economic Value
II. Life Term Proposition
III. Human Life Value
IV. Future Life Value
Question 8
Which of the below is the most appropriate explanation for the fact that young people are
charged lesser life insurance premium as compared to old people?
I. Young people are mostly dependant
II. Old people can afford to pay more
III. Mortality is related to age
IV. Mortality is inversely related to age
Question 9
Which of the below is not an advantage of cash value insurance contracts?

I. Safe and secure investment
II. Inculcates saving discipline
III. Lower yields
IV. Income tax advantages
Question 10
Which of the below is an advantage of cash value insurance contracts?

I. Returns subject to corroding effect of inflation
II. Low accumulation in earlier years
III. Lower yields
IV. Secure investment

Answer 1

The elements of life insurance business include asset, risk, principle of mutuality and the life
insurance contract.
Subsidy is not an element of life insurance business.
Answer 2

Prof. Hubener devised the concept of Human Life Value (HLV).
Answer 3

Term insurance does not have a savings element associated with it.
Answer 4

Air cannot be termed / categorised as an asset.
Answer 5

Natural wear and tear is a phenomenon and not a risk.
Answer 6

Life insurance policies are contracts of assurance while general insurance policies are
contracts of indemnity.
Answer 7

Human Life Value is a method to calculate the amount of insurance needed by an individual.
Answer 8

Mortality is related to age and hence young people who are less likely to die are charged
lower premiums as compared to old people.
Answer 9

Lower yield is one of the disadvantages of cash value insurance contracts.
Answer 10

Secure investment is one of the advantages of cash value insurance contracts.
CHAPTER 3
LEGAL PRINCIPLES OF LIFE INSURANCE
Question 1
Which element of a valid contract deals with premium?
I. Offer and acceptance
II. Consideration
III. Free consent
IV. Capacity of parties to contract
Question 2
_____________ relates to inaccurate statements, which are made without any fraudulent
intention.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation
Question 3
________________ involves pressure applied through criminal means.

I. Fraud
II. Undue influence
III. Coercion
IV. Mistake
Question 4
Which among the following is true regarding life insurance contracts?

I. They are verbal contracts not legally enforceable
II. They are verbal which are legally enforceable
III. They are contracts between two parties (insurer and insured) as per requirements of
Indian Contract Act, 1872
IV. They are similar to wager contracts
Question 5
Which of the below is not a valid consideration for a contract?

I. Money
II. Property
III. Bribe
IV. Jewellery
Question 6
Which of the below party is not eligible to enter into a life insurance contract?
I. Business owner
II. Minor
III. House wife
IV. Government employee
Question 7
Which of the below action showcases the principle of “Uberrima Fides”?

I. Lying about known medical conditions on an insurance proposal form
II. Not revealing known material facts on an insurance proposal form
III. Disclosing known material facts on an insurance proposal form
IV. Paying premium on time
Question 8
Which of the below is not correct with regards to insurable interest?

I. Father taking out insurance policy on his son
II. Spouses taking out insurance on one another
III. Friends taking out insurance on one another
IV. Employer taking out insurance on employees
Question 9
When is it essential for insurable interest to be present in case of life insurance?

I. At the time of taking out insurance
II. At the time of claim
III. Insurable interest is not required in case of life insurance
IV. Either at time of policy purchase or at the time of claim
Question 10
Find out the proximate cause for death in the following scenario?
Ajay falls off a horse and breaks his back. He lies there in a pool of water and contracts
pneumonia. He is admitted to the hospital and dies because of pneumonia.
I. Pneumonia
II. Broken back
III. Falling off a horse
IV. Surgery

Answer 1

The element of a valid contract deals with premium is consideration.
Answer 2

Misrepresentation relates to inaccurate statements, which are made without any fraudulent
intention.
Answer 3

Coercion involves pressure applied through criminal means.
Answer 4

Life insurance contracts are contracts between two parties (insurer and insured) as per
requirements of Indian Contract Act, 1872.
Answer 5

Bribe is not a valid consideration for a contract.
Answer 6

Minors are not eligible to contract a life insurance contract.
Answer 7

Disclosing known material facts on an insurance proposal form is in tune with the principle of
“Uberrima Fides”.
Answer 8

Friends cannot take out insurance on one another as there is no insurable interest present.
Answer 9

In case of life insurance insurable interest needs to be present at the time of taking out
insurance.
Answer 10

Falling off the horse is the proximate cause for Ajay’s death.
CHAPTER 4
FINANCIAL PLANNING
Question 1
An individual with an aggressive risk profile is likely to follow wealth _______ investment
style.
I. Consolidation
II. Gifting
III. Accumulation
IV. Spending
Question 2
Which among the following is a wealth accumulation product?

I. Bank Loans
II. Shares
III. Term Insurance Policy
IV. Savings Bank Account
Question 3
Savings can be considered as a composite of two decisions. Choose them from the list below.
I. Risk retention and reduced consumption
II. Gifting and accumulation
III. Spending and accumulation
IV. Postponement of consumption and parting with liquidity
Question 4
During which stage of life will an individual appreciate past savings the most?
I. Post retirement
II. Earner
III. Learner
IV. Just married
Question 5
What is the relation between investment horizon and returns?

I. Both are not related at all
II. Greater the investment horizon the larger the returns
III. Greater the investment horizon the smaller the returns
IV. Greater the investment horizon more tax on the returns
Question 6
Which among the following can be categorised under transactional products?

I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds
Question 7
Which among the following can be categorised under contingency products?

I. Bank deposits
II. Life insurance
III. Shares
IV. Bonds
Question 8
Which of the below can be categorised under wealth accumulation products?

I. Bank deposits
II. Life insurance
III. General insurance
IV. Shares
Question 9
__________ is a rise in the general level of prices of goods and services in an economy over a
period of time.
I. Deflation
II. Inflation
III. Stagflation
IV. Hyperinflation
Question 10
Which of the below is not a strategy to maximise discretionary income?

I. Debt restructuring
II. Loan transfer
III. Investment restructuring
IV. Insurance purchase

Answer 1

Individual with an aggressive risk profile is likely to follow wealth accumulation investment
style.
Answer 2

Shares are a wealth accumulation product.
Answer 3

Savings is a combination of postponement of consumption and parting with liquidity.
Answer 4

Post retirement an individual appreciate past savings the most.
Answer 5

Greater the investment horizon larger will be the returns.
Answer 6

Bank deposits can be categorised under transactional products.
Answer 7

Life insurance can be categorised under contingency product.
Answer 8

Shares can be categorised under wealth accumulation products.
Answer 9

Inflation is a rise in the general level of prices of goods and services in an economy over a
period of time.
Answer 10

Insurance purchase cannot maximise discretionary income.
CHAPTER 5
LIFE INSURANCE PRODUCTS –I
Question 1
___________ life insurance pays off a policyholder's mortgage in the event of the person's
death.
I. Term
II. Mortgage
III. Whole
IV. Endowment
Question 2
The ________ the premium paid by you towards your life insurance, the ________ will be the
compensation paid to the beneficiary in the event of your death.
I. Higher, Higher
II. Lower, Higher
III. Higher, Lower
IV. Faster, Slower
Question 3
Which of the below option is correct with regards to a term insurance plan?
I. Term insurance plans come with life-long renewability option
II. All term insurance plans come with a built-in disability rider
III. Term insurance can be bought as a stand-alone policy as well as a rider with another
policy
IV. There is no provision in a term insurance plans to convert it into a whole life insurance
plan
Question 4
In decreasing-term insurance, the premiums paid ____________ over time.

I. Increase
II. Decrease
III. Remain constant
IV. Are returned
Question 5
Using the conversion option present in a term policy you can convert the same to __________.
I. Whole life policy
II. Mortgage policy
III. Bank FD
IV. Decreasing term policy
Question 6
What is the primary purpose of a life insurance product?

I. Tax rebates
II. Safe investment avenue
III. Protection against the loss of economic value of an individual’s productive abilities
IV. Wealth accumulation
Question 7
Who among the following is best advised to purchase a term plan?

I. An individual who needs money at the end of insurance term
II. An individual who needs insurance and has a high budget
III. An individual who needs insurance but has a low budget
IV. An individual who needs an insurance product that gives high returns
Question 8
Which of the below statement is incorrect with regards to decreasing term assurance?
I. Death benefit amount decreases with the term of coverage
II. Premium amount decreases with the term of coverage
III. Premium remains level throughout the term
IV. Mortgage redemption plans are an example of decreasing term assurance plans
Question 9
Which of the below statement is correct with regards to endowment assurance plan?
I. It has a death benefit component only
II. It has a survival benefit component only
III. It has both a death benefit as well as a survival component
IV. It is similar to a term plan
Question 10
Which of the below is an example of an endowment assurance plan?

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

Answer 1

Mortgage life insurance pays off a policyholder's mortgage in the event of the person's death.
Answer 2

The higher the premium paid by you towards your life insurance, the higher will be the
compensation paid to the beneficiary in the event of your death.
Answer 3

Term insurance can be bought as a stand-alone policy as well as a rider with another policy
Answer 4

In decreasing-term insurance, the premiums paid remain constant over time.
Answer 5
IC33The correct option is I.
Using the conversion option present in a term policy you can convert the same to whole life
policy.
Answer 6

Protection against the loss of economic value of an individual’s productive abilities is the
primary purpose behind a life insurance product.
Answer 7

Term plan is a good choice for an individual who needs insurance and has a low budget.
Answer 8

Premium remains level throughout the term for decreasing term assurance plans.
Answer 9
Endowment assurance plan has both a death benefit as well as a survival component.
Answer 10

Money Back Plan is an example of an endowment assurance plan.
CHAPTER 6
LIFE INSURANCE PRODUCTS –II
Question 1
What does inter-temporal allocation of resources refer to?
I. Postponing allocation of resources until the time is right
II. Allocation of resources over time
III. Temporary allocation of resources
IV. Diversification of resource allocation
Question 2
Which among the following is a limitation of traditional life insurance products?

I. Yields on these policies is high
II. Clear and visible method of arriving at surrender value
III. Well defined cash and savings value component
IV. Rate of return is not easy to ascertain
Question 3
Where was the Universal Life Policy introduced first?

I. USA
II. Great Britain
III. Germany
IV. France
Question 4
Who among the following is most likely to buy variable life insurance?
I. People seeking fixed return
II. People who are risk averse and do not dabble in equity
III. Knowledgeable people comfortable with equity
IV. Young people in general
Question 5
Which of the below statement is true regarding ULIP’s?

I. Value of the units is determined by a formula fixed in advance
II. Investment risk is borne by the insurer
III. ULIP’s are opaque with regards to their term, expenses and savings components
IV. ULIP’s are bundled products
Question 6
All of the following are characteristics of variable life insurance EXCEPT:

I. Flexible premium payments
II. Cash value is not guaranteed
III. Policy owner selects where savings reserve is invested
IV. Minimum Death benefit is guaranteed
Question 7
Which of the below is correct with regards to universal life insurance?

Statement I: It allows policy owner to vary payments
Statement II: Policy owner can earn market based rate of return on cash value
I. I is true
II. II is true
III. I and II are true
IV. I and II are false
Question 8
All of the following is true regarding ULIP’s EXCEPT:

I. Unit holder can choose between different kind of funds
II. Life insurer provides guarantee for unit values
III. Units may be purchased by payment of a single premium or via regular premium payments.
IV. ULIP policy structure is transparent with regards to the insurance expenses component
Question 9
As per IRDAI norms, an insurance company can provide which of the below non-traditional
savings life insurance products are permitted in India?
Choice I: Unit Linked Insurance Plans
Choice II: Variable Insurance Plans
I. I only
II. II only
III. I and II both
IV. Neither I nor II
Question 10
What does unbundling of life insurance products refers to?

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

Answer 1
Inter-temporal allocation of resources refers to allocation of resources over time.
Answer 2

Rate of return is not easy to ascertain in traditional life insurance products.
Answer 3

Universal Life Policy was first introduced in the USA.
Answer 4

Knowledgeable people comfortable with equity are most likely to buy variable life insurance.
Answer 5

ULIP’s are transparent with regards to their term, expenses and savings components.
Answer 6

Premium payments are fixed and not flexible with variable life insurance.
Answer 7
Both statements are true. Premium payment flexibility is a characteristic of universal life
insurance. This form of life insurance also permits the policy owner to earn a rate of return
tied to some market-based index.
Answer 8

Life insurer does not provide guarantee for unit values in case of ULIP’s.
Answer 9

As per IRDAI norms non-traditional savings life insurance products permitted in India include
unit linked insurance plans and variable insurance plans.
Answer 10

Separation of the protection and savings element refers to the unbundling of life insurance products.
CHAPTER 7
PENSION AND ANNUITIES
Question 1
Which of the below risk cannot be addressed through pensions?
I. Life longevity
II. Inflation
III. Investment risk
IV. Early death
Question 2
With relation to annuities, explain what does “Liquidation period” refer to?
I. Period between the purchase of annuity and commencement of payments
II. Period during which insurer makes annuity payments
III. Time taken to build up the corpus
IV. Insolvency period
Question 3
Amount of annuity payable depends on which of the following:

1. Principal sum of money
2. Investment period
3. Rate of return
4. Duration of annuity payments
I. 1 and 2
II. 1,2 and 3
III. 1,3 and 4
IV. 1,2,3 and 4
Question 4
Amount of annuity payable is inversely related to which of the following:

1. Principal sum of money
2. Investment period
3. Rate of return
4. Duration of annuity payments
I. 1 only
II. 2 only
III. 3 only
IV. 4 only
Question 5
What is the basic contingency associated with pensions?

I. Mortality
II. Morbidity
III. Post-retirement income security
IV. Disability
Question 6
Which of the below best describes an ordinary annuity?

I. Equal cash flows at equal time intervals forever
II. Equal cash flows at equal time intervals for a specific time period
III. Lumpy cash flows at equal time intervals forever
IV. Lumpy cash flows at equal time intervals for a specific time period
Question 7
From the choices mentioned below, select the one that cannot be categorised as an annuity.
I. Rs. 2000 received today, Rs. 2000 received next year and Rs. 2000 received in 2 years
II. Electricity Bill
III. Car payments
IV. Mortgage payments
Question 8
In an ordinary annuity, payments are made or received ___________ of each period.

I. At the beginning
II. At the end
III. On maturity
IV. 6 months before expiry
Question 9
___________ is an annuity with an infinite life and making continuous annual payments.
I. APR
II. Amortised loan
III. Perpetuity
IV. Principal
Question 10
_____________ is a term used to refer pensions that have some level of Government
administration.
I. Insurance Pension Fund
II. Public Pension Fund
III. Private Pension Fund
IV. Market Pension Fund

Answer 1

Early death risk cannot be addressed through pensions.
Answer 2

The period during which the insurer makes annuity payments, is referred to as liquidation
period.
Answer 3

Amount of annuity payable depends on principal sum of money, investment period, rate of
return and duration of annuity payments.
Answer 4

Amount of annuity payable is inversely related to duration of annuity payments.
Answer 5

The basic contingency associated with pensions is that of post-retirement income security.
Answer 6

Equal cash flows at equal time intervals for a specific time period best describe an ordinary
annuity.
Answer 7

An electricity bill cannot be categorised as an annuity.
Answer 8

In an ordinary annuity payments are made or received at the end of each period.
Answer 9
The correct option is III. IC33
Perpetuity is an annuity with an infinite life and making continuous annual payments.
Answer 10

Public pension fund is a term used to refer pensions that have some level of Government administration.
CHAPTER 8
HEALTH INSURANCE
Question 1
IRDAI stands for __________.
I. International Regulatory & Development Authority of India
II. Indian Regulatory & Development Authority
III. Insurance Regulatory & Development Authority
IV. Income Regulatory & Development Authority
Question 2
The term TPA refers to ________.

(Answer with regards to health insurance)
I. The Primary Associate
II. To Provide Assistance
III. Third Party Administrator
IV. Third Party Assistance
Question 3
Which of the below group would not be eligible for a group health insurance policy?
I. Employees of a company
II. Credit card holders of an organisation
III. Professional association members
IV. Group of unrelated individuals formed for the purpose of availing group health insurance
Question 4
Who cannot be covered under a family floater policy?

I. Children
II. Spouse
III. Parents-in-law
IV. Maternal uncle
Question 5
As per IRDAI regulations issued in February 2013, what is the grace period allowed beyond the
expiry date of the policy, for renewal?
I. 15 days
II. 30 days
III. 45 days
IV. 60 days
Question 6
Identify the form of insurance that is depicted in the following scenario.

Scenario: Patient pays the health provider and is subsequently reimbursed by the health
insurance company.
I. Service Benefit
II. Direct contracting
III. Indemnity
IV. Casualty
Question 7
Moral hazard by health insurance companies can result in _________.

I. Community rating
II. Adverse selection
III. Abuse of health insurance
IV. Risk pooling
Question 8
Primary care can be described as ____________.

I. Care provided to patient in an acute setting
II. Care provided in hospitals
III. First point of contact for people seeking healthcare
IV. Care provided by Doctors
Question 9
________________ is an insured who undergoes treatment after getting admitted in a

hospital.
I. Inpatient
II. Outpatient
III. Day patient
IV. House patient
Question 10
_________ refers to a hospital/health care provider enlisted by an insurer to provide medical

services to an insured on payment by a cashless facility.
I. Day care centre
II. Network provider
III. Third Party Administrator
IV. Domiciliary

Answer 1

IRDAI stands for Insurance Regulatory & Development Authority of India
Answer 2

The term TPA refers to “Third Party Administrator”.
Answer 3

Group of unrelated individuals formed for the purpose of availing group health insurance are
not eligible for group health insurance.
Answer 4

Maternal uncle cannot be covered under a family floater policy.
Answer 5
As per IRDAI regulations issued in February 2013, 30 days grace period is allowed beyond the
expiry date of the policy, for renewal.
Answer 6

The scenario refers to indemnity form of insurance.
Answer 7

Moral hazard by health insurance companies can result in adverse selection.
Answer 8

Primary care can be described as the first point of contact for people seeking healthcare.
Answer 9

Inpatient is an insured who undergoes treatment after getting admitted in a hospital.
Answer 10

Network provider refers to a hospital/health care provider enlisted by an insurer to provide medical
services to an insured on payment by a cashless facility.
(8.I) INTRODUCTION TO HEALTH INSURANCE
(8.II) HEALTH INSURANCE PRODUCTS
Question 1
Which of the below statement is correct with regards to a hospitalization expenses policy?
I. Only hospitalization expenses are covered
II. Hospitalization as well as pre and post hospitalization expenses are covered
III. Hospitalization as well as pre and post hospitalization expenses are covered and a
lumpsum amount is paid to the family members in the event of insured’s death
IV. Hospitalization expenses are covered from the first year and pre and post hospitalization
expenses are covered from the second year if the first year is claim free.
Question 2
Identify which of the below statement is correct?

I. Health insurance deals with morbidity
II. Health insurance deals with mortality
III. Health insurance deals with morbidity as well as mortality
IV. Health insurance neither deals with morbidity or mortality
Question 3
During investigation, of a health insurance claim presented by Rajiv Mehto, insurance
company finds that instead of Rajiv Mehto, his brother Rajesh Mehto had been admitted to
hospital for treatment. The policy of Rajiv Mehto is not a family floater plan. This is an
example of ___________fraud.
I. Impersonation
II. Fabrication of documents
III. Exaggeration of expenses
IV. Outpatient treatment converted to in-patient / hospitalization
Question 4
Under which of the following condition, is domiciliary hospitalization is covered in a health
insurance policy?
I. The condition of the patient is such that he/she can be removed to the Hospital/Nursing
Home , but prefer not to
II. The patient cannot be removed to Hospital/Nursing Home for lack of accommodation
therein
III. The treatment can be carried out only in hospital/Nursing home
IV. Duration of hospitalization is exceeding 24 hours
IC33 LIFE INSURANCE 292
Question 5
Which of the following codes capture the procedures performed to treat the illness?
I. ICD
II. DCI
III. CPT
IV. PCT

Answer 1

Customers are primary stakeholder in insurance claim process
Answer 2
The correct answer is II.

In case of insurance claim denial, individuals can approach legal authorities.
Answer 3

This is an example of impersonation, as the person insured is different from person treated.
Answer 4
Domiciliary treatment is provided in health insurance policy, only when the patient cannot be
removed to Hospital/Nursing Home for lack of accommodation therein
Answer 5

Current Procedure Terminology (CPT) codes capture the procedures performed to treat the
illness.
(8.III) HEALTH INSURANCE UNDERWRITING
Question 1
Which of the following factor does not affect the morbidity of an individual?
I. Gender
II. Spouse job
III. Habits
IV. Residence location
Question 2
According to the principle of indemnity, the insured is paid for __________.

I. The actual losses to the extent of the sum insured
II. The sum insured irrespective of the amount actually spent
III. A fixed amount agreed between both the parties
IV. The actual losses irrespective of the sum assured
Question 3
The first and the primary source of information about an applicant, for the underwriter is his
________________.
I. Age proof documents
II. Financial documents
III. Previous medical records
IV. Proposal form
Question 4
The underwriting process is completed when ___________________.

I. All the critical information related to the health and personal details of the proposer are
collected through the proposal form
II. All the medical examinations and tests of the proposer are completed
III. The received information is carefully assessed and classified into appropriate risk
categories
IV. The policy is issued to the proposer after risk selection and pricing.
Question 5
Which of the following statements about the numerical rating method is incorrect? IC33 LIFE
INSURANCE 248
I. Numerical rating method provides greater speed in the handling of a large business with the
help of trained personnel.
II. Analysis of difficult or doubtful cases is not possible on the basis of numerical points
without medical referees or experts.
III. This method can be used by persons without any specific knowledge of medical science.
IV. It ensures consistency between the decisions of different underwriters.

Answer 1

The morbidity of an individual is not affected by their spouse’s job, though their own
occupation is one of the important factors which can affect their morbidity.
Answer 2

According to the principle of indemnity, insured is compensated for the actual costs or losses,
but to the extent of the sum insured.
Answer 3

The primary source of information about an applicant, for the underwriter is his proposal
form or application form, in which all the critical information related to the health and
personal details of the proposer are collected.
Answer 4

The underwriting process is completed when the received information is carefully assessed
and classified into appropriate risk categories.
Answer 5
The correct answer is II. IC33 LIFE INSURANCE 249
A more careful analysis of difficult or doubtful cases is made possible by numerical rating
method because past experience with reference to the doubtful points is expressed
numerically in terms of a known standard and shadings.
(8.IV) HEALTH INSURANCE CLAIMS
Question 1
Who among the following is considered as primary stakeholder in insurance claim process?
I. Customers
II. Owners
III. Underwriters
IV. Insurance agents/brokers
Question 2
Girish Saxena’s insurance claim was denied by insurance company. In case of a denial, what is
the option available to Girish Saxena, apart from the representation to the insurer?
I. To approach Government
II. To approach legal authorities
III. To approach insurance agent
IV. Nothing could be done in case of case denial
Question 3
During investigation, of a health insurance claim presented by Rajiv Mehto, insurance

company finds that instead of Rajiv Mehto, his brother Rajesh Mehto had been admitted to
hospital for treatment. The policy of Rajiv Mehto is not a family floater plan. This is an
example of ___________fraud.
I. Impersonation
II. Fabrication of documents
III. Exaggeration of expenses
IV. Outpatient treatment converted to in-patient / hospitalization
Question 4
Under which of the following condition, is domiciliary hospitalization is covered in a health
insurance policy?
I. The condition of the patient is such that he/she can be removed to the Hospital/Nursing
Home , but prefer not to
II. The patient cannot be removed to Hospital/Nursing Home for lack of accommodation
therein
III. The treatment can be carried out only in hospital/Nursing home
IV. Duration of hospitalization is exceeding 24 hours
Question 5
Which of the following codes capture the procedures performed to treat the illness?
I. ICD
II. DCI
III. CPT
IV. PCT

Answer 1

Customers are primary stakeholder in insurance claim process
Answer 2

In case of insurance claim denial, individuals can approach legal authorities.
Answer 3

This is an example of impersonation, as the person insured is different from person treated.
Answer 4
Domiciliary treatment is provided in health insurance policy, only when the patient cannot be
removed to Hospital/Nursing Home for lack of accommodation therein
Answer 5

Current Procedure Terminology (CPT) codes capture the procedures performed to treat the
illness.
CHAPTER 9
APPLICATIONS OF LIFEINSURANCE
Question 1
The sum assured under keyman insurance policy is generally linked to which of the following?
I. Keyman income
II. Business profitability
III. Business history
IV. Inflation index
Question 2
Mortgage redemption insurance (MRI) can be categorised under ________.

I. Increasing term life assurance
II. Decreasing term life assurance
III. Variable life assurance
IV. Universal life assurance
Question 3
Which of the below losses are covered under keyman insurance?

I. Property theft
II. Losses related to the extended period when a key person is unable to work
III. General liability
IV. Losses caused due to errors and omission
Question 4
A policy is effected under the MWP Act. If the policyholder does not appoint a special trustee
to receive and administer the benefits under the policy, the sum secured under the policy
becomes payable to the _____________.
I. Next of kin
II. Official Trustee of the State
III. Insurer
IV. Insured
Question 5
Mahesh ran a business on borrowed capital. After his sudden demise, all the creditors are
doing their best to go after Mahesh’s assets. Which of the below assets is beyond the reach of
the creditors?
I. Property under Mahesh’s name
II. Mahesh’s bank accounts
III. Term life insurance policy purchased under Section 6 of MWP Act
IV. Mutual funds owned by Mahesh
Question 6
Which of the below option is true with regards to MWP Act cases?
Statement I: Maturity claims cheques are paid to policyholders
Statement II: Maturity claims cheques are paid to trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true
Question 7
Which of the below option is true with regards to MWP act cases?
Statement I: Death claims are settled in favour of nominees
Statement II: Death claims are settled in favour of trustees
I. I is true
II. II is true
III. Both I and II are true
IV. Neither I nor II is true
Question 8
Ajay pays insurance premium for his employees. Which of the below insurance premium will
not be treated deductible as compensation paid to employee?
Choice I: Health insurance with benefits payable to employee
Choice II: Keyman life insurance with benefits payable to Ajay
I. I only
II. II only
III. Both I and II
IV. Neither I nor II
Question 9
The practice of charging interest to borrowers who pledge their property as collateral but
leaving them in possession of the property is called _____________.
I. Security
II. Mortgage
III. Usury
IV. Hypothecation
Question 10
Which of the below policy can provide protection to home loan borrowers?
I. Life Insurance
II. Disability Insurance
III. Mortgage Redemption Insurance
IV. General Insurance

Answer 1

Sum assured under keyman insurance policy is generally linked to business profitability.
Answer 2

Mortgage redemption insurance (MRI) can be categorised under decreasing term life
assurance.
Answer 3

Losses related to the extended period when a key person is unable to work are covered under
keyman insurance.
Answer 4

If the policyholder does not appoint a special trustee to receive and administer the benefits
under the policy, the sum secured under the policy becomes payable to the Official Trustee
of the State.
Answer 5

Term life insurance policy purchased under Section 6 of MWP Act is beyond the reach of court
attachments and creditors.
Answer 6

Maturity claims cheques are paid to trustees.
Answer 7
Death claims are settled in favour of trustees.
Answer 8

Keyman life insurance with benefits payable to Ajay will not be treated deductible as
compensation paid to employee.
Answer 9

The practice of charging interest to borrowers who pledge their property as collateral but
leaving them in possession of the property is called mortgage.
Answer 10
Mortgage Redemption Insurance can provide protection to home loan borrowers.
CHAPTER 10
PRICING AND VALUATION IN LIFE INSURANCE
Question 1
What does the term “premium” denote in relation to an insurance policy?
I. Profit earned by the insurer
II. Price paid by an insured for purchasing the policy
III. Margins of an insurer on a policy
IV. Expenses incurred by an insurer on a policy
Question 2
Which of the below is not a factor in determining life insurance premium?

I. Mortality
II. Rebate
III. Reserves
IV. Management expenses
Question 3
What is a policy withdrawal?

I. Discontinuation of premium payment by policyholder
II. Surrender of policy in return for acquired surrender value
III. Policy upgrade
IV. Policy downgrade
Question 4
Which of the below is one of the ways of defining surplus ?

I. Excessive liabilities
II. Excessive turnover
III. Excess value of liabilities over assets
IV. Excess value of assets over liabilities
Question 5
Which of the below is not a component of ULIP premiums?

I. Policy allocation charge
II. Investment risk premium
III. Mortality charge
IV. Social security charge
Question 6
Life insurance companies may offer rebate to the buyer on the premium that is payable on
the basis of ___________.
I. Sum assured chosen by the buyer
II. Type of policy chosen by the buyer
III. Term of the plan chosen by the buyer
IV. Mode of payment (cash, cheque, card) chosen by the buyer
Question 7
Interest rates are one of the important components used while determining the premium.
Which of the below statement is correct with regards to interest rates?
I. Lower the interest rate assumed, lower the premium
II. Higher the interest rate assumed, higher the premium
III. Higher the interest rate assumed, lower the premium
IV. The interest rates don’t affect premiums
Question 8
Which of the below statement is correct?

I. Business strain is the difficulty faced by the companies in securing new business
II. Business strain arises at the end of the policy term.
III. Business strain arises because of excess premium
IV. Business strain arises because of excess expenses at the new business stage .
Question 9
With regards to valuation of assets by insurance companies, __________ is the value at which
the life insurer has purchased or acquired its assets.
I. Discounted future value
II. Discounted present value
III. Market value
IV. Book value
Question 10
In case of __________, a company expresses the bonus as a percentage of basic benefit and
already attached bonuses.
I. Reversionary bonus
II. Compound bonus
III. Terminal bonus
IV. Persistency bonus

Answer 1

Price paid by an insured for purchasing the policy is termed as premium.
Answer 2

Rebate is not a factor in determining life insurance premium.
Answer 3
Surrender of policy in return for acquired surrender value is termed as policy withdrawal.
Answer 4

Excess value of assets over liabilities is one way of defining surplus.
Answer 5

ULIP premium comprises of policy allocation charge, investment risk premium and mortality
charge.
Answer 6

Life insurance companies may offer rebate to the buyer on the premium that is payable on
the basis of sum assured chosen by the buyer.
Answer 7

Higher the interest rate assumed, lower the premium
Answer 8
The correct option is IV

Business strain arises because of excess expenses at new business stage.
Answer 9

With regards to valuation of assets by insurance companies, book value is the value at which
the life insurer has purchased or acquired its assets.
Answer 10
The correct option is II. IC33 LIFE INSURANCE 326
In case of compound bonus, a company expresses the bonus as a percentage of basic benefit
and already attached bonuses.
CHAPTER 11
DOCUMENTATION –PROPOSAL STAGE
Question 1
Which of the below is an example of standard age proof?
I. Ration card
II. Horoscope
III. Passport
IV. Village Panchayat certificate
Question 2
Which of the below can be attributed to moral hazard?

I. Increased risky behaviour following the purchase of insurance
II. Increased risky behaviour prior to the purchase of insurance
III. Decreased risky behaviour following the purchase of insurance
IV. Engaging in criminal acts post being insured
Question 3
Which of the below features will be checked in a medical examiner’s report?

I. Emotional behaviour of the proposer
II. Height, weight and blood pressure
III. Social status
IV. Truthfulness
Question 4
A __________ is a formal legal document used by insurance companies that provides details
about the product.
I. Proposal form
II. Proposal quote
III. Information docket
IV. Prospectus
Question 5
The application document used for making the proposal is commonly known as the
__________.
I. Application form
II. Proposal form
III. Registration form
IV. Subscription form
Question 6
From the below given age proof documents, identify the one which is classified as non-
standard by insurance companies.
I. School certificate
II. Identity card in case of defence personnel
III. Ration card
IV. Certificate of baptism
Question 7
Money laundering is the process of bringing _______ money into an economy by hiding its
_______ origin so that it appears to be legally acquired.
I. Illegal, illegal
II. Legal, legal
III. Illegal, legal
IV. Legal, illegal
Question 8
In case the policyholder is not satisfied with the policy, he / she can return the policy within
the free-look period i.e. within ________of receiving the policy document.
I. 60 days
II. 45 days
III. 30 days
IV. 15 days
Question 9
Which of the below statement is correct with regards to a policy returned by a policyholder
during the free look period?
I. The insurance company will refund 100% of the premium
II. The insurance company will refund 50% of the premium
III. The insurance company will refund the premium after adjusting for proportionate risk
premium for the period on cover, medical examination expenses and stamp duty charges
IV. The insurance company will forfeit the entire premium
Question 10
Which of the below is not a valid address proof?

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

Answer 1

Passport is an example of a standard age proof.
Answer 2

Increased risky behaviour following the purchase of insurance can be attributed to moral
hazard.
Answer 3

Height, weight and blood pressure are among the few items that will be checked in a medical
examiner’s report.
Answer 4

A prospectus is a formal legal document used by insurance companies that provides details
about the product.
Answer 5
The application document used for making the proposal is commonly known as the proposal
form.
Answer 6

Ration card is classified as a non-standard age proof.
Answer 7

Money laundering is the process of bringing illegal money into an economy by hiding its illegal
origin so that it appears to be legally acquired.
Answer 8

In case the policyholder is not satisfied with the policy, he / she can return the policy within
the free-look period i.e. within 15 days of receiving the policy document.
Answer 9

With regards to a policy returned by a policyholder during the free look period, the insurance
company will refund the premium after adjusting for proportionate risk premium for the
period on cover, medical examination expenses and stamp duty charges.
Answer 10

PAN Card is not a valid address proof
CHAPTER 12
DOCUMENTATION –POLICY CONDITION -I
Question 1
Which of the below statement is false with regards to nomination?
I. Policy nomination is not cancelled if the policy is assigned to the insurer in return for a loan
II. Nomination can be done at the time of policy purchase or subsequently
III. Nomination can be changed by making an endorsement in the policy
IV. A nominee has full rights on the whole of the claim
Question 2
In order for the policy to acquire a guaranteed surrender value, for how long must the
premiums be paid as per law?
I. Premiums must be paid for at least 2 consecutive years
II. Premiums must be paid for at least 3 consecutive years
III. Premiums must be paid for at least 4 consecutive years
IV. Premiums must be paid for at least 5 consecutive years
Question 3
When is a policy deemed to be lapsed?

I. If the premiums are not paid on due date
II. If the premiums are not paid before the due date
III. If the premium has not been paid even during days of grace
IV. If the policy is surrendered
Question 4
Which of the below statement is correct with regards to grace period of an insurance policy?
I. The standard length of the grace period is one month.
II. The standard length of the grace period is 30 days.
III. The standard length of the grace period is one month or 30 days.
IV. The standard length of the grace period is one month or 31 days.
Question 5
What will happen if the policyholder does not pay the premium by the due date and dies
during the grace period?
I. The insurer will consider the policy void due to non-payment of premium by the due date
and hence reject the claim
II. The insurer will pay the claim and waive off the last unpaid premium
III. The insurer will pay the claim after deducting the unpaid premium
IV. The insurer will pay the claim after deducting the unpaid premium along with interest
which will be taken as 2% above the bank savings interest rate
Question 6
During the revival of a lapsed policy, which of the below aspect is considered most significant
by the insurance company? Choose the most appropriate option.
I. Evidence of insurability at revival
II. Revival of the policy leading to increase in risk for the insurance company
III. Payment of unpaid premiums with interest
IV. Insured submitting the revival application within a specified time frame
Question 7
For an insurance policy nomination is allowed under _________ of the Insurance Act, 1938.
I. Section 10
II. Section 38
III. Section 39
IV. Section 45
Question 8
Which of the below statement is incorrect with regards to a policy against which a loan has
been taken from the insurance company?
I. The policy will have to be assigned in favour of the insurance company
II. The nomination of such policy will get cancelled due to assignment of the policy in favour
of the insurance company
III. The nominee’s right will affected to the extent of the insurer’s interest in the policy
IV. The policy loan is usually limited to a percentage of the policy’s surrender value
Question 9
Which of the below statement is incorrect with regards to assignment of an insurance policy?
I. In case of Absolute Assignment, in the event of death of the assignee, the title of the policy
would pass to the estate of the deceased assignee.
II. The assignment of a life insurance policy implies the act of transferring the rights right,
title and interest in the policy (as property) from one person to another.
III. It is necessary that the policyholder must give notice of assignment to the insurer.
IV. In case of Absolute Assignment, the policy vests absolutely with the assignee till maturity,
except in case of death of the insured during the policy tenure, wherein the policy reverts
back to the beneficiaries of the insured.
Question 10
Which of the below alteration will be permitted by an insurance company?

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

Answer 1

A nominee does not have any right to whole (or part) of the claim.
Answer 2

In order for the policy to acquire a guaranteed surrender value, premiums must be paid for at
least 3 consecutive years.
Answer 3

If the premium has not been paid even during days of grace, the policy is deemed to be
lapsed.
Answer 4
IC-33 LIFE INSURANCE 367

The standard length of the grace period is one month or 31 days.
Answer 5

If the policyholder does not pay the premium by the due date and dies during the grace
period, the insurer will pay the claim after deducting the unpaid premium.
Answer 6

During the revival of a lapsed policy, evidence of insurability at revival is considered as the
most significant aspect by the insurance company.
Answer 7

For an insurance policy nomination is allowed under Section 39 of the Insurance Act, 1938.
Answer 8

Option II is incorrect.
With regards to a policy against which a loan has been taken from the insurance company, the
nomination will NOT get cancelled due to assignment of the policy in favour of the insurance
company.
Answer 9

Option IV is incorrect.
In case of Absolute Assignment, the policy vests absolutely with the assignee till maturity. In
the event of death of the insured during the policy tenure, the policy will NOT revert back to
the beneficiaries of the insured. The assignee will be entitled to policy benefits.
Answer 10
An alteration that involves splitting up of the policy into two or more policies is permitted.
CHAPTER 14
UNDERWRITING
Question 1
Which of the following denotes the underwriter’s role in an insurance company?
I. Process claims
II. Decide acceptability of risks
III. Product design architect
IV. Customer relations manager
Question 2
Which of the following is not an underwriting decision?

I. Risk acceptance at standard rates
II. Declinature of risk
III. Postponement of risk
IV. Claim rejection
Question 3
Which of the following is not a standard age proof?

I. Passport
II. School leaving certificate
III. Horoscope
IV. Birth certificate
Question 4
Which of the following condition will affect a person’s insurability negatively?

I. Daily jogs
II. Banned substance abuse
III. Lazy nature
IV. Procrastination
Question 5
Under what method of underwriting does an underwriter assign positive rating points for all
negative or adverse factors (negative points for any positive or favourable factors)?
I. Judgment
II. Arbitrary
III. Numerical rating
IV. Single step
Question 6
Under risk classification, ___________ consist of those whose anticipated mortality

corresponds to the standard lives represented by the mortality table.
I. Standard lives
II. Preferred risks
III. Sub-standard lives
IV. Declined lives
Question 7
Amruta is pregnant. She has applied for a term insurance cover. Which of the below option
will be the best option to choose for an underwriter to offer insurance to Amruta? Choose the
most likely option.
I. Acceptance at ordinary rates
II. Acceptance with extra premium
III. Decline the proposal
IV. Acceptance with a restrictive clause
Question 8
Which of the below insurance proposal is not likely to qualify under non-medical
underwriting?
I. Savita, aged 26 years, working in an IT company as a software engineer
II. Mahesh, aged 50 years, working in a coal mine
III. Satish, aged 28 years, working in a bank and has applied for an insurance cover of Rs. 1
crore
IV. Pravin, aged 30 years, working in a departmental store and has applied for an endowment
insurance plan for a tenure of 10 years
Question 9
Sheena is suffering from acute diabetes. She has applied for an insurance plan. In this case
the underwriter is most likely to use ____________ for underwriting. Choose the most
appropriate option.
I. Judgment method
II. Numerical method
III. Any of the above method since an illness like diabetes does not play a major role in the
underwriting process
IV. Neither of the above method as diabetes cases are rejected outright
Question 10
Santosh has applied for a term insurance policy. His anticipated mortality is significantly
lower than standard lives and hence could be charged a lower premium. Under risk
classification, Santosh will be classified under ___________.
I. Standard lives
II. Preferred risks
III. Substandard lives
IV. Declined lives

Answer 1

Underwriter decides acceptability of risks.
Answer 2

Claim rejection is not an underwriting decision.
Answer 3

Horoscope is not a standard age proof.
Answer 4

Banned substance abuse will affect a person’s insurability negatively.
Answer 5

Numerical rating method of underwriting assigns positive rating points for all negative or
adverse factors (negative points for any positive or favourable factors).
Answer 6

Under risk classification, standard lives consist of those whose anticipated mortality
corresponds to the standard lives represented by the mortality table.
Answer 7
In Amruta’s case, considering her pregnancy, the best option that the underwriter can choose
is to offer insurance to Amruta with a restrictive clause. This restrictive clause can be limiting
insurance payment in the event of pregnancy related death occurring within say three months
of delivery.
Answer 8

Mahesh’s insurance proposal is not likely to qualify under non-medical underwriting because
his age is higher (50 years) and his occupation is more risky as compared to other occupations
in software, banking industry etc.
Answer 9

When deciding on a complex case like that of Sheena who is suffering from acute diabetes,
the underwriter will use the judgment method of underwriting.
Answer 10

Under risk classification, Santosh will be classified under preferred risks.
CHAPTER 15
PAYMENTS UNDER A LIFE INSURANCE POLICY
Question 1
Given below is a list of policies. Identify under which type of policy, the claim payment is
made in the form of periodic payments?
I. Money-back policy
II. Unit linked insurance policy
III. Return of premium policy
IV. Term insurance policy
Question 2
Mahesh has bought a life insurance policy with a critical illness rider. He has made absolute
assignment of the policy in favour of Karan. Mahesh suffers a heart attack and there is a claim
of Rs. 50,000 under the critical illness rider. To whom will the payment be made in this case?
I. Mahesh
II. Karan
III. The payment will be shared equally by Mahesh and Karan
IV. Neither of the two because Mahesh has suffered the heart attack but the policy is assigned
in favour of Karan.
Question 3
Praveen died in a car accident. The beneficiary submits documents for death claim. Which of
the below document is an additional document required to be submitted in case of accidental
death as compared to natural death.
I. Certificate of burial or cremation
II. Treating physician’s certificate
III. Employer’s certificate
IV. Inquest Report
Question 4
Which of the below death claim will be treated as an early death claim?
I. If the insured dies within three years of policy duration
II. If the insured dies within five years of policy duration
III. If the insured dies within seven years of policy duration
IV. If the insured dies within ten years of policy duration
Question 5
Given below are some events that will trigger survival claims. Identify which of the below
statement is incorrect?
I. Claim paid on maturity of a term insurance policy
II. An instalment payable upon reaching the milestone under a money-back policy
III. Claim paid for critical illnesses covered under the policy as a rider benefit
IV. Surrender value paid on surrender of an endowment policy by the policyholder
Question 6
A payment made under a money-back policy upon reaching a milestone will be classified
under which type of claim?
I. Death claim
II. Maturity claim
III. Periodical survival claim
IV. Surrender claim
Question 7
Shankar bought a 10 year Unit Linked Insurance Plan. If he dies before the maturity of the
policy which of the below will be paid?
I. Lower of sum assured or fund value
II. Higher of sum assured or fund value
III. Premiums paid will be returned with 2% higher interest rate as compared to a bank’s
savings deposit
IV. Surrender value
Question 8
Based on classification of claims (early or non-early), pick the odd one out?
I. Ramya dies after 6 months of buying a term insurance plan
II. Manoj dies after one and half years of buying a term insurance plan
III. David dies after two and half years of buying a term insurance plan
IV. Pravin dies after five and half years of buying a term insurance plan
Question 9
Given below is a list of documents to be submitted for a normal death claim by all
beneficiaries in the event of death of life insured. Pick the odd one out which is additionally
required to be submitted only in case of death by accident.
I. Inquest report
II. Claim form
III. Certificate of burial or cremation
IV. Hospital’s certificate
Question 10
As per IRDAI (Protection of Policyholders Interests) Regulations, 2002, a claim under a life
policy shall be paid or be disputed, within 30 days from the date of receipt of all relevant
papers and clarifications required.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days

Answer 1
The correct option is I

In case of a money-back policy the claim payment is made in the form of periodic payments.
Answer 2
The correct option is II

In this case the entire payment of Rs. 50,000 will be made to Karan as the policy has been
assigned in favour of Karan on an absolute basis.
Answer 3

Documents like claim form by nominee, Certificate of burial or cremation, Treating
physician’s certificate, Hospital’s certificate, Employer’s certificate etc. are required to be
submitted in case of natural death as well as accidental death.
First Information Report (FIR), Inquest Report, Post-Mortem Report, Final Report etc. are
additional documents required to be submitted in case of accidental death as compared to
natural death.
Answer 4

If the insured dies within three years of policy duration, the death claim will be treated as
early death claim.
Answer 5
Option I is incorrect. There is no claim paid on maturity of a term insurance policy.
Answer 6
The correct option is III

A payment made under a money-back policy upon reaching a milestone will be classified
under periodic survival claim.
Answer 7
The correct option is II

If Shankar dies before the maturity of the ULIP policy, higher of sum assured or fund value
will be paid.
Answer 8

Option IV is the odd one out because it will be treated as a non-early claim. Option I, II and III
will be treated as early claims.
Answer 9

Inquest report is additionally required to be submitted in case of death by accident. The
other documents like claim form, certificate of burial or cremation, hospital’s certificate are
required to be submitted by all beneficiaries in the event of death of life insured
Answer 10

As per IRDAI (Protection of Policyholders Interests) Regulations, 2002, a claim under a life
policy shall be paid or be disputed, within 30 days from the date of receipt of all relevant
papers and clarifications required.
CHAPTER 16
REGULATORY ASPECTS
Questions 1
Which of the following entities are not regulated by IRDAI ?
I. Insurance Company
II. Insurance Agent
III. Broker
IV. Employees of an Insurance Company
Questions 2
Insurance agent represents the __________.
I. Insurance company
II. Sub-agent
III. Co-agent
IV. Broker
Question 3
Agency appointment letter is given by
I. Government of India
II. IRDAI
III. General Insurance Corporation
IV. Insurer
Question 4
What is not prohibited in the latest insurance regulations?
I. Rebates
II. Multilevel Marketing
III. Sharing of commission+
IV. Commission
Question 5
Identify the statement which is not correct. Insurance agent should __________.
I. Indicate the scale of commission if asked by the customer
II. Share the commission by way of rebate
III. Disclose his licence on demand
IV. Indicate the premium to be charged
Question 6
Which of the following is incorrect ?
I. An agent is expected to inform the insurer all relevant facts about the prospectus
II. Advise the prospectus or nomination
III. Offer rates different than those offer by his insurer
IV. Render assistance in claim settlement
Question 7
Which of the following acts is insurance business in India not linked to?
I. ESIC Act, 1948
II. ECGC Act, 1964
III. LIC Act, 1956
IV. Income Tax Act, 1961
Question 8
IRDAI Regulations prescribe insurers obligations. Which of the following is incorrect ?
I. At point of sale
II. Towards policy servicing
III. Towards control of expenses
IV. Customer relationship management
Question 9
Minimum qualification required for insurance agent is _______ pass.

I. Graduate
II. 10th
III. Post-graduate
IV. 7th
Question 10
___________ may deal with more than one life insurance company or general insurance
company or both.
I. Agent
II. Surveyor
III. Composite agent
IV. None of the above

Answer 1
Employees of insurance companies are not regulated by IRDAI
Answer 2

Insurance agent represents the insurance company
Answer 3
Appointment letter is given by the insurer .
Answer 4
Commission is not prohibited.
Answer 5

An insurance agent should not share the commission by way of rebate IC-33 LIFE INSURANCE 421
Answer 6
An agent can not offer rates different than those offered by insurer
Answer 7
Income Tax Act 1961 is not linked to insurance business in India.
Answer 8
Customer relationship management is not prescribed by the IRDAI
regulations towards Insurer obligation.
Answer 9

Minimum qualification required for insurance agent is 10th pass.
Answer 10

Composite agent may deal with more than one life insurance company or general insurance company or
both.
CHAPTER 17
LIFE INSURANCE AGENCY AS A CAREER
Question 1
An insurance agent is typically a representative of ______________.
I. Customer
II. Insurance company
III. Government
IV. IRDA
Question 2
Direct marketing involves which of the below?

I. Telemarketing
II. Insurance agents
III. Bancassurance
IV. All of the above
Question 3
“Hurt not others with that which pains yourself”. This golden rule of ethics is given in the
teaching of which religion?
I. Buddhism
II. Christianity
III. Hinduism
IV. Judaism
Question 4
Which is not an insurance distribution channel?
I. Agency
II. Bancassurance
III. Multilevel Marketing
IV. Direct Marketing
Question 5
Request for long term success in insurance agency profession do not include
I. Fire in the Belly
II. Positive self-image
III. Ability to connect
IV. Getting business at any cost
Question 6
As per Section 182 of the Indian Contract Act, _____ is a person employed to do any act for
another or to represent another in dealing with a third person.
I. Principal Officer
II. Proxy
III. Mediator
IV. Agent
Question 7
An insurance broker represents _______.

I. Insurance company
II. Insured
III. Association of insurance companies
IV. Community of people who have already taken insurance
Question 8
Which of the below reflects Principle 2 of the Insurance Marketplace Standards Association
(IMSA) principles?
I. To provide competent and customer-focused sales and service.
II. To engage in active and fair competition.
III. To provide for fair and expeditious handling of customer complaints and disputes.
IV. To maintain a system of supervision and review that is reasonably designed to achieve
compliance with these principles of ethical market conduct.
Question 9
Which of the following do IMSIA principles not include?
I. Conduct business according to high standards of honesty
II. Provide competent customer focussed sales and services
III. Compete to win
IV. Provide fare and swift handling of customer complaints
Question 10
IRDA has decided to implement guidelines on persistency from _______.

I. 1st July 2011
II. 1st July 2012
III. 1st July 2013
IV. 1st July 2014

Answer 1

An insurance agent is typically a representative of insurance company.
Answer 2

Direct marketing involves telemarketing, mail marketing, internet and web based marketing
and work site marketing
Answer 3
“Hurt not others with that which pains yourself”. This golden rule of ethics is given in the
teaching of Buddhism.
Answer 4
Correct option is III
Multilevel Marketing is not a distribution channel.
Answer 5
Correct option is IV
Getting business at any cost is not a request for long term success
Answer 6

As per Section 182 of the Indian Contract Act, an agent is a person employed to do any act for
another or to represent another in dealing with a third person.
Answer 7

An insurance broker represents the insured.
Answer 8

Principle 2 of the Insurance Marketplace Standards Association (IMSA) principles reflects: To
provide competent and customer-focused sales and service.
Answer 9
Correct option is III
Compete to win is not a IMASA principle. IC-33 LIFE INSURANCE 447
Answer 10

IRDA has decided to implement guidelines on persistency from 1 st July 2014.
CHAPTER 18
LIFE INSURANCE SELLING PROCESS
Question 1
The key to successful closing lies in helping the prospect to say ________.
I. No
II. Don’t know
III. Yes
IV. Maybe
Question 2
Which of the following is not part of sales process?

I. Prospecting
II. Sales interview
III. Loss assessment
IV. Closing
Question 3
Prospecting in an insurance sale is ___________.

I. Gathering the names of people who may be interested in insurance
II. Preparing a list of all the persons in the city
III. Enlisting all the policyholders of the branch office
IV. Preparing list of all the agents in the neighbourhood
Question 4
In insurance, need-gap analysis involves _____________.

I. Identifying the areas where the prospect needs insurance protection
II. Identifying people to work as insurance agents
III. Identifying how much assets a prospect has
IV. Identifying the poverty level of the prospects
Question 5
Cold Calling is ___________.

I. Meeting customers in winter
II. Meeting customers when they are suffering from cold
III. Meeting people unannounced
IV. Meeting customer after fire was extinguished
Question 6
________ as a profession refers to the act of inducing a commercial transaction through

inducing the purchase of a product or service, such act being carried out with the intent of
earning remuneration.
I. Marketing
II. Selling
III. Advertising
IV. Promotion
Question 7

I. Life insurance is sold, not bought
II. Life insurance is bought, not sold
III. Life insurance is neither bought nor sold; it is a necessity and hence should be bought by
every individual.
IV. None of the above
Question 8

I. Selling is an art and not a science
II. Selling is a science and not an art
III. Selling is neither an art or a science
IV. Selling is both an art and a science
Question 9
While prospecting for selling insurance, approaching the members of a caste or community
association will be classified under which category?
I. Immediate group
II. Natural market
III. Centres of influence
IV. References and introductions
Question 10
Identify the incorrect statement with regards to a ‘qualified’ prospect.

I. A qualified prospect is one who can pay for insurance
II. A qualified prospect is one who can be approached on a favourable basis
III. A qualified prospect is one who is academically well qualified to buy insurance
IV. A qualified prospect is one who can pass the company underwriting requirements

Answer 1

The key to successful closing lies in helping the prospect to say “Yes”.
Answer 2

Loss assessment is not a part of the sales process.
Answer 3

Prospecting in an insurance sale is gathering the names of people who may be interested in
insurance.
Answer 4

Need-gap analysis involves identifying the areas where the prospect needs insurance
protection.
Answer 5

Cold calling involves meeting people unannounced. IC-33 LIFE INSURANCE 470
Answer 6

Selling as a profession refers to the act of inducing a commercial transaction through inducing
the purchase of a product or service, such act being carried out with the intent of earning
remuneration.
Answer 7

The correct statement is “life insurance is sold, not bought”.
Answer 8
Selling is both an art and a science.
Answer 9

While prospecting for selling insurance, approaching the members of a caste or community
association will be classified under natural market category.
Answer 10

Option III is incorrect.
In insurance, while qualifying prospects, their academic qualification does not have much role
to play with the decision for buying insurance.
CHAPTER 19
CUSTOMER SERVICE
Question 1
____________ is not a tangible good.
I. House
II. Insurance
III. Mobile Phone
IV. A pair of jeans
Question 2
____________ is not an indicator of service quality.

I. Cleverness
II. Reliability
III. Empathy
IV. Responsiveness
Question 3
In customer relationship the first impression is created:

I. By being confident
II. By being on time
III. By showing interest
IV. By being on time, showing interest and being confident
Question 4
Select the correct statement:

I. Ethical behaviour is impossible while selling insurance
II. Ethical behaviour is not necessary for insurance agents
III. Ethical behaviour helps in developing trust between the agent and the insurer
IV. Ethical behaviour is expected from the top management only
Question 5
Active listening involves:

I. Paying attention to the speaker
II. Giving an occasional nod and smile
III. Providing feedback
IV. Paying attention to the speaker, giving an occasional nod and smile and providing
feedback
Question 6
_________ refers to the ability to perform the promised service dependably and accurately.
I. Reliability
II. Responsiveness
III. Assurance
IV. Empathy
Question 7
___________ relate to one’s ability to interact effectively with other workers and customers,
both at work and outside.
I. Hard skills
II. Soft skills
III. Negotiating skills
IV. Questioning skills
Question 8
Which of the below elements promote trust?

I. Communication, assertiveness and being present
II. Politeness, affirmation and communication
III. Attraction, communication and being present
IV. Affirmation, assertiveness and attraction
Question 9
Which of the below tips are useful for making a good first impression?
I. Being on time always
II. Presenting yourself appropriately
III. Being open, confident and positive
IV. All of the above
Question 10
___________ is reflected in the caring attitude and individualised attention provided to
customers.
I. Assurance
II. Empathy
III. Reliability
IV. Responsiveness

Answer 1

Insurance is not a tangible good.
Answer 2

Cleverness is not an indicator of service quality.
Answer 3

In customer relationship the first impression is created by being confident, on time and by
showing interest.
Answer 4

Ethical behaviour helps in developing trust in the agent and the insurer.
Answer 5

Active Listening involves paying attention to the speaker, giving an occasional nod and smile
and providing feedback.
Answer 6

Reliability refers to the ability to perform the promised service dependably and accurately.
Answer 7

Soft skills relate to one’s ability to interact effectively with other workers and customers,
both at work and outside.
Answer 8

Attraction, communication and being present are the three elements that promote trust.
Answer 9

Some useful tips for making a good first impression include: Being on time always, presenting
yourself appropriately, being open, confident and positive etc.
Answer 10
Empathy is reflected in the caring attitude and individualised attention provided to customers.
CHAPTER 20
GRIEVANCE REDRESSAL MECHANISM
Question 1
Expand the term IGMS
I. Insurance General Management System
II. Indian General Management System
III. Integrated Grievance Management System
IV. Intelligent Grievance Management System
Question 2
Which of the below consumer grievance redressal agencies would handle consumer disputes
amounting between Rs. 20 lakhs and Rs. 100 lakhs?
I. District Forum
II. State Commission
III. National Commission
IV. Zilla Parishad
Question 3
Which among the following cannot form the basis for a valid consumer complaint?
I. Shopkeeper charging a price above the MRP for a product
II. Shopkeeper not advising the customer on the best product in a category
III. Allergy warning not provided on a drug bottle
IV. Faulty products
Question 4
Which of the below will be the most appropriate option for a customer to lodge an insurance
policy related complaint?
I. Police
II. Supreme Court
III. Insurance Ombudsman
IV. District Court
Question 5
Which of the below statement is correct with regards to the territorial jurisdiction of the
Insurance Ombudsman?
I. Insurance Ombudsman has National jurisdiction
II. Insurance Ombudsman has State jurisdiction
III. Insurance Ombudsman has District jurisdiction
IV. Insurance Ombudsman operates only within the specified territorial limits
Question 6
How is the complaint to be launched with an insurance ombudsman?
I. The complaint is to be made in writing
II. The complaint is to be made orally over the phone
III. The complaint is to be made orally in a face to face manner
IV. The complaint is to be made through newspaper advertisement
Question 7
What is the time limit for approaching an Insurance Ombudsman?

I. Within two years of rejection of the complaint by the insurer
II. Within three years of rejection of the complaint by the insurer
III. Within one year of rejection of the complaint by the insurer
IV. Within one month of rejection of the complaint by the insurer
Question 8
Which among the following is not a pre-requisite for launching a complaint with the
Ombudsman?
I. The complaint must be by an individual on a ‘Personal Lines’ insurance
II. The complaint must be lodged within 1 year of the insurer rejecting the complaint
III. Complainant has to approach a consumer forum prior to the Ombudsman
IV. The total relief sought must be within an amount of Rs.20 lakhs.
Question 9
Are there any fee / charges that need to be paid for lodging the complaint with the
Ombudsman?
I. A fee of Rs 100 needs to be paid
II. No fee or charges need to be paid
III. 20% of the relief sought must be paid as fee
IV. 10% of the relief sought must be paid as fee
Question 10
Can a complaint be launched against a private insurer?

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

Answer 1

IGMS stands for Integrated Grievance Management System.
Answer 2

State Commission would handle consumer disputes amounting between Rs. 20 lakhs and Rs.
100 lakhs.
Answer 3

Shopkeeper not advising the customer on the best product in a category cannot form the basis
of a valid consumer complaint.
Answer 4

Complaint is to be lodged with the Insurance Ombudsman under whose territorial jurisdiction
the insurer’s office falls.
Answer 5

Insurance Ombudsman operates only within the specified territorial limits.
Answer 6

The complaint to the ombudsman is to be made in writing.
Answer 7
The correct option is III. IC
Answer 8
Complainant need not approach a consumer forum prior to the Ombudsman.
Answer 9

No fee / charges need to be paid for lodging the complaint with the Ombudsman.
Answer 10

Yes, a complaint can be launched against private insurers.
All the Best !!

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Question Bank from IC 33 2015

Risk transfer through risk pooling is called ________.

The measures to reduce chances of occurrence of risk are known as _____.

By transferring risk to insurer, it becomes possible ___________.

Origins of modern insurance business can be traced to __________.

In insurance context ‘risk retention’ indicates a situation where _____.

Which of the following statement is true?

Which of the following statements is true?

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

Answers to Self-Examination Questions

The correct option is III.

The correct option is II.

The correct option is II.

The correct option is IV.

The correct option is IV.

The correct option is II.

The correct option is I.

The correct option is II.

Which among the following cannot be termed as an asset?

Which of the below cannot be categorised under risks?

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

Which of the below is an advantage of cash value insurance contracts?

Answers to Self-Examination Questions

The correct option is IV.

The correct option is III.

The correct option is I.

The correct option is III.

The correct option is III.

The correct option is II.

The correct option is III.

The correct option is III.

The correct option is III.

The correct option is IV.

________________ involves pressure applied through criminal means.

Which among the following is true regarding life insurance contracts?

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

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

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

When is it essential for insurable interest to be present in case of life insurance?

Answers to Self-Examination Questions

The correct option is II.

The correct option is I.

The correct option is III.

The correct option is III.

The correct option is III.

The correct option is II.

The correct option is III.

The correct option is III.

The correct option is I.

The correct option is III.

Which among the following is a wealth accumulation product?

What is the relation between investment horizon and returns?

Which among the following can be categorised under transactional products?

Which among the following can be categorised under contingency products?

Which of the below can be categorised under wealth accumulation products?

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

Answers to Self-Examination Questions

The correct option is III.

The correct option is II.