Test 2
Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. What facility do insurers use to cover risks beyond their exposure limits?
a. Bancassurance c. Both a & b
b. Reinsurance d. Neither a nor b
ANSWER: B
2. Which market areas do Micro Insurance product concentrate?
a. People with large families c. People employed with the government
b. People with low income d. People with high income
ANSWER: B
3. What is IRDA stands for & year of Incorporation?
a. Insurance Regulatory and
Development Authority (IRDA). The
IRDA was incorporated as an
autonomous body in April 1999
c. IRDA is an independent body
constituted to address the grievances
of the insurance policy holder
b. Insurance Regulatory and
Development Authority (IRDA) was
constituted in 1956
d. None of the above
ANSWER: A
4. A human being's value is measured by?
a. The income that he generates c. His academic qualification
b. The value of the goods that he
produces
d. All of the above
ANSWER: A
5. The business of insurance affects?
a. Availability of capital for business c. The safety of equipment in factories
b. The life span of individuals d. All of the above
ANSWER: A
6. An agent is intermediary between?
a. Client and insurance company c. Client and IRDA
b. Insurance Company & IRDA d. Insurance and Reinsurance Company
ANSWER: A
7. Which of the following statement is correct?
a. Lung cancer is peril and smoking is a
hazard
c. Both the statements are correct
b. Smoking is peril and lung cancer is
hazard
d. Both the statements are incorrect
ANSWER: A
8. Ramkumar is habitual car racer. What kind of hazard is this?
a. Physical hazard c. Moral hazard
b. Fraudulent representations d. Peril
ANSWER: A
9. Which of following refers to specific event which might cause a loss?
a. Peril c. Physical hazard
b. Hazard d. Uncertainty
ANSWER: B
10. Which risk is associated with those events which are not in control of an individual and
no possibility of making profit?
a. Pure risk c. Financial risk
b. Particular-risk d. Insurable risk
ANSWER: A
11. Insurance Contract without any Insurable Interest will result in?
a. Wagering Contract c. Void Contract
b. Legal Contract d. All of the above
ANSWER: A
12. To be a valid contract, the declaration is necessary in which document?
a. Policy Document c. FPR
b. proposal form d. RPR
ANSWER: B
13. Changes in policy can be made by?
a. Issuing a new policy c. Corrections on the policy
b. Endorsement d. Not allowed
ANSWER: B
14. In which kind of policy the insurable interest should exist at the time of claim only?
a. Motor insurance c. Liability insurance
b. Marine insurance d. Travel insurance
ANSWER: B
15. What are the factors involved in calculating surrender value?
a. Number of year's premium paid c. Sum assured
b. Number of premium payable d. All of above
ANSWER: D
16. Policies as he was regularly paying the premium. What is your suggestion?
a. Due to regular premium he can take
loan from both the policies
c. No loan from money back but can take
loan from whole life
b. He can surrender whole life and take
loan from money back policy
d. He can't take loan from whole life
policy but can avail loan from money
back policy
ANSWER: C
17. Ramlal is an insurance policyholder. He has recently shifted his home from New Delhi to
Noida. He wants the address to be changed. This change in policy document will be
effective through?
a. Terms & condition c. Endorsement
b. Preamble d. Schedule
ANSWER: C
18. Moral hazard reflects the?
a. Intentions and attitude of proposer c. Occupation and residence of proposer
b. Habits and Hobbies of proposer, d. Medical and personal history of
proposer
ANSWER: A
19. Mr. Gupta is recently detected with lung cancer. He would like take an insurance. What
is your suggestion?
a. Time of death is uncertain, so
insurance can be given
c. He can take insurance after submitting
health certificate
b. only lung is affected so health
insurance can be given
d. Cannot be given insurance for health
reason
ANSWER: D
20. Ajay is 35 years old and works for a multinational corporation (MNC). He has a ten-
year-old son, Vijay, whom he dreams will one day become a doctor. Ajay’s spouse is a
housewife, and his parents are retired and dependent on him. Ajay has a home loan of
40?
a. term plan c. endowment plan
b. health plan d. traditional plan
ANSWER: A
21. Open market option under annuity policy would extend which of the following benefit?
a. Ensure better annuity rate c. increase in return
b. Increase in range d. Switch of funds
ANSWER: B
22. A lump sum withdrawal allowed as commutation in pension plan is?
a. 1/3 of accumulated fund c. 1/2 of accumulated fund
b. 114 of accumulated fund d. Full withdrawal is allowed
ANSWER: A
23. If a person chooses Cumulative deposit than Recurring deposit, difference will be in?
a. frequency of interest calculation c. Interest tax
b. Tax d. Tenure
ANSWER: A
24. Rahul switch from direct holding of shares to equity based mutual funds. The impact on
risk would be?
a. Less transparent c. Less return
b. More diversified d. Steep rise
ANSWER: B
25. What is similarity between recurring deposits and cumulate deposit in a bank?
a. Guarantee c. Tenure
b. Taxation d. Lock in periods
ANSWER: A 26. In cumulative bank deposit the interest unit is normally compound on what basis?
a. Monthly c. Half yearly
b. Quarterly d. Annually
ANSWER: B
27. What frequencies can one take in annuity?
a. Monthly, quarterly, half yearly,
yearly
c. Fortnightly, monthly ,half yearly,
yearly
b. Fortnightly, quarterly, monthly,
yearly
d. None of the above
ANSWER: A
28. What are the Special features of Health plan?
a. Covers disease expenses c. Covers hospitalization cost
b. Helps in Tax Benefits d. All of the above
ANSWER: D
29. How do riders help the customer in life insurance?
a. Allow policy holders to customise
their insurance cover with additional
benefit
c. It adds to operative clause
b. Rider is like an additional clause d. Rider is like a preamble
ANSWER: A
30. The sole focus during a client’s fact-find session was healthcare requirements and estate
planning. Which main life stage is he most likely to fall into?
a. Young married couple c. Pre-retirement.
b. Young married with children. d. Retirement
ANSWER: D
31. With profit policies can be given to?
a. surety c. partner
b. keyman d. Individual
ANSWER: D
32. A couple has 7 year old son. What solution would they be looking for?
a. Retirement c. Child education
b. Health care d. Life cover
ANSWER: C
33. Mrs. Sheela received some amount out of her husband's death. In such a situation what
will be her prime focus?
a. Saving c. Investment management
b. Insurance d. Planning for pension
ANSWER: C
34. Under S 80C the maximum tax deduction that can be gain premium paid Rs._in a
financial year?
a. Rs. 75,000 c. Rs. 1,20,000
b. Rs. 1, 10,000 d. Rs. 1,00,000
ANSWER: D
35. Perceived needs are?
a. Short term needs c. Imagined to be important by client
b. Imagined to be important by advisor d. Long term needs
ANSWER: C
36. Fact find process helps to?
a. Ensure a sales is achieved c. Create an audit trail for future
complaints
b. Identify client need d. Provide regulatory body about agents
database
ANSWER: B
37. Which type of questioning is very useful to gather information from clients?
a. Close ended question c. Interrogative question
b. Open ended question d. Clarification question
ANSWER: B
38. Higher persistency to the insurer ensures what?
a. More productivity c. Higher Profits
b. Higher attrition d. Higher S.A
ANSWER: C
39. An agent reveals his commission received from insurance sale to X and Y. Both plans
are of same duration but he received higher commission of X. Why is his commission of
X higher than that of Y?
a. 'X' has bought other limited premium
product
c. ‘X’ is married
b. 'Y' has bought a single premium
product
d. 'Y' is single
ANSWER: A
40. Amit & Rashmi are newly married. Both are working couple, They want to invest their
savings of Rs. 1, 00,000 annually to build corpus. They make down payment for their
house in 5 years from now, an adviser sold them a Ulip to meet their requirement this
may result in:
a. Ruining the long term reputation of
company
c. Bad reputation of individual adviser
b. Opportunity of new business for
adviser
d. Financial burden on the couple
ANSWER: B
41. Without submitting any form of claim, a life insurance policy holder received payments
of maturity then what type of policy he is holding?
a. ULIP c. Money Back
b. Term d. Health
ANSWER: C
42. What is the maximum time in which the insurer should settle a claim when all documents
are submitted?
a. 3 days c. 30 days
b. 15 days d. 10 days
ANSWER: C
43. The delay in settling claim by any insurance company as per IRDA norms has to pay _%
if the bank rate was 5.2% during the claim pd.
a. 0.07 c. 0.072
b. 0.09 d. 0.08
ANSWER: C
44. An indemnity bond was signed in a policy when the claim was paid. This indicates that
the policy was?
a. Lost c. Lapsed
b. Paid up d. Surrendered
ANSWER: A
45. Mr. Bhaskar had taken a term plan in 2008 for Rs. 7 lac. He has an ADB rider worth RS.
4 lac. Unfortunately Bhaskar died in 2017 in a car accident. How much will be the death
claim?
a. Total 7 lac will be paid as death claim c. Total 11 lac will be paid
b. Total 4 lac will be paid as death claim
due to car accident.
d. Total 7 lac will be paid without any
deduction
ANSWER: C
46. In a MWP policy the beneficiaries under the plan, other than wife can be?
a. Ex wife c. Parents
b. Sibling d. Children
ANSWER: D
47. Board of Insurance is related to?
a. SEBI c. Insurance Association
b. IRDA d. None of the above
ANSWER: B
48. A policy has been rejected by the company under direct intimation to the customer and
copy to the Agent, what is the next action of the Agent?
a. He has to inform the customer that the
company has broken relationship with
the customer
c. He has to explain the reasons for
rejection to the customer
b. He plans to change the plan d. He takes up with the higher authorities
ANSWER: C
49. Sh. Gayaram, an insurance advisor, advised his customer to close the old policy and take
a new one. But new policy does not provide any extra benefits to the customer. It will,
however, give more commission to Sh. Gayaram. This kind of practice is called?
a. Switching c. Redirecting
b. Churning d. Shifting
ANSWER: B
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