Question Bank: Remembering - Understanding - Applying - Analysing - Evaluating - Creating)

Revised on 14-11-2018
RATHINAM COLLEGE OF ARTS AND SCIENCE (AUTONOMOUS)

Question Bank
Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

Question Bank should be prepared based on the Outcome Based Education (OBE).
The faculty has to mention the particulars of course outcome, level of Revised Blooms Taxonomy, and the Cognitive Level (Remembering
| Understanding| Applying | Analysing | Evaluating | Creating)
PART – A (1 Marks)
(Minimum of 20 Questions in each Unit of type MCQ, True or False or open question type, no maximum limit)
Unit – I
Revised Blooms
Course Taxonomy Level
S.No Question with options Cognitive
Outcome
(High / Low) Level
1. Risk Management includes __________
a)Financial In situations b) Non-Financial Institutions

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c)Both (a) and (b) d) None of these
Answer: c) Both (a) and (b)
2. To be insurable, a risk must have potential losses that are
a) Under the control of the insured b) Centrally located

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c) Un measurable d) Non-predictable
Answer: c) Un measurable
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3. Risks that insurance firms will not assume are called
a) Un measurable risks b) Insurable risks

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c) Endorsements d) Pre risks
Answer: a) Un measurable risk
4. from the following which is not included in external risk
a) Market condition b) Political environment

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c) Worker’s strike d) Distribution
Answer: c) Worker’s strike
5. The risks which a businessman has to face in the ordinary course of the business is called as
a) Dynamic risk b) Business risk

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c) Personal risk d) Speculative risk
Answer: b) Business risk
6. The risk can be insured such as financial static and pure risks is called
a) Pure risk b) Liability risk

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c) Financial risk d) Insurable risk
Answer: d) Insurable risk
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7. The definition of peril is
a) An event or condition that increases the chance of loss
b) The uncertainty concerning loss.

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c) A measure of the accuracy with which a loss can be predicted
d) The actual cause of the loss.
Answer: d) The actual cause of the loss
8. Which risk may give loss or profit?
a) Pure risk b) Liability risk

c) Speculative risk d) Insurable risk
Answer: c) Speculative risk
9. A contract by which one party undertakes in consideration for payment is called
a) Insurance b) Policy
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c) Premium d) None of these
. Answer: c) Premium
10. Insurance includes ___________ CO1 Low Remembering
a) Risk sharing b) Cooperation
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. c) Payment at the time of contingency d) All of the above
Answer: d) All of the above
11. Which requisites are not essential for insurance contract?
a) Free consent b) Onetime payment

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c) Legal object d) Offer and acceptance
Answer: b) Onetime payment
12. Risk insurance is important for
a) Transfer of loss b) Development of economy

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c) Both (a) and (b) c) none of these
Answer: c) Both (a) and (b
13. Which is not included in the function of insurance?
a) Provide information b) Provide protection

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c) Provide certainty d) Prevention of losses
Answer: a) Provide information
14. Free consent is not caused by CO1 Low Remembering
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a) Coercion c) Fraud
c) Mistake d) all of the above
Answer: d) all of the above
15. General insurance is of the following types
a) Fire Insurance b) Marine insurance
c) Principle of performance d) all of the above CO1 Low Remembering
16. IRDA has come into operation from
a) 1999 b) 2000
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c) 2001 d) 1998
Answer: b) 2000
17. Which is included in the general policy?
a) Whole life policy b) Endowment policy

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c) Market policy d) Marine insurance policy
Answer: d) Marine insurance policy
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18. The period for which policy is taken is called
a) Date of payment b) Time of maturity

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c) Term of policy d) all of the above
19. Which is important term in insurance?
a) Risk b) Peril
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c) Hazard d) all of the above
20. The IRDA would consist of chairperson and how many members
a) 6 Members b) 9 Members
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c) 3 Members d) 10 Members
Answer: b) 9 Members
Unit – II
Revised Blooms
Course
S.No Question with options Taxonomy Level Cognitive
Outcome
(High / Low) Level
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21. Which of the following element is contained by the life insurance?
a) Security b) Investment
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c) all of the above d) Profit
Answer: c) all of the above
22. The word ‘Assurance’ is used for

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c) Principle of performance d) Life insurance
Answer: d) Life insurance
23. The cost of insurance is determined using
a) Morality tables b) Book

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c) Life index d) Census
Answer: a) Morality tables
24. What is the basis of life insurance contract?
a) Money b) Death
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c) Disability d) Proposal form
Answer: d) Proposal form
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25. When term insurance expire?
a) After 5 year b) On death

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c) On maturity d) after one year
Answer: b) On death
26. Whole life insurance is a
a) Short-term insurance plan b) Medium-term insurance plan

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c) Long-term insurance plan d) none of these
Answer: c) Long-term insurance plan
27. Who has a monopoly of life insurance?
a) GIC b) DICGC
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c) LIC d) none of these
Answer: c) LIC
28. Life insurance can be divided in how many classes?
a) 1 b) 2
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c) 3 d) 4
Answer: b) 2
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29. Which of these is not one of the four major types of life insurance?
a) Term life b) Universal life

c) Guaranteed-issue life d) Whole life
Answer: c) Guaranteed-issue life
30. When Life Insurance Corporation was nationalized
a) 1956 b) 1958
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c) 1944 d) none of these
Answer: a) 1956
31. How many health categories are decided by life insurance companies?
a) 6 b) 5
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c) 4 d) 3
Answer: c) 4
32. In which type of policy the rate of premium is high?
a) Term insurance policy b) Endowment insurance policy

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c) Whole life insurance policy d) none of these
Answer: b) Endowment insurance policy
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33. The fee charged by the insurer on account of providing services is called
a) Profit b) Dividend
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c) Premium d) Installment
Answer: c) Premium
34. Life insurance corporation Act?
a) 1956 b) 1957
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c) 1958 d) 1959
Answer: a) 1956
35. Insurance Act?
a) 1937 b) 1938
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c) 1939 d) 1940
Answer: a) 1938
36. IRDA Act?
a) 1999 b) 2000
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c) 2001 d) 2002
Answer: a) 1999
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37. Indian contract Act?
a) 1871 b) 1872
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c) 1873 d) 1874
Answer: b) 1872
38. General Insurance business Act?
a) 1971 b) 1972
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c) 1973 d) 1974
Answer: b) 1972
39. Types of law relating to life insurance?
a) 1 b) 2
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c) 3 d) 4
Answer: c) 3
40. Types of general principles of life insurance?
a) 2 b) 4
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c) 6 d) 8
Answer: c) 6
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Unit – III
Revised Blooms
Course
Outcome
(High / Low) Level
41. from the following which is not a general insurance

Answer: d) Life insurance
42. The insurance basically covers three risk areas, namely, hull, cargo, and freight is called?

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Answer: b) Marine insurance
43. Nature of fire insurance are
a) Written contract b) Two parties

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c) Period of insurance d) all of the above
44. From the following which principles comes in the fire insurance CO3 Low Understanding
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a) Principle of indemnity b) Principle of good faith
c) Principals of insurable interest d) All of the above
45. From following which steps are not taken to recover the claim procedure
a) Notice b) Recording
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c) Inspection d) Evidence
Answer: b) Recording
46. Motor vehicle may be classified into
a) Private cars b) Commercial vehicles

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c)Both (a) and (b) d) None of these
47. Disclosure of material facts such as
a) Fire Insurance b) Life insurance

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c) Motor insurance d) All of the above
48. Motor insurance claims are settled in CO3 Low Remembering
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a) Two Stages b) Three Stages
c) Four Stages d) Five Stages
Answer: b) Three stages
49. From following which is not included in fire insurance
a) Time policy b) Specific policy

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c) Valued policy d) Floating policy
Answer: a) Time policy
50. Fire insurance contract includes
a) Indemnity contract b) Utmost good faith

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c) Insurable interest d) All of the above
51. Which type of events are covered under personal accident insurance
a) Rail/Road/air accident b) Injury due to any collision

c) Burn injury d) All of the above
52. From following polices which one not comes in the motor insurance CO3 Low Understanding
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a) Act policies b) Comprehensive policy
c) Open policy c) Garage insurance policy
Answer: c) Open policy
53. The causes of fire due to
a) Physical hazard b) Moral hazard

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c) None of these d) Both (a) and (b)
54. PTD stands for
a) Permanent Total Disablement b) Partial Total Disablement

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c) Periodic Total Disablement d) None of these
Answer: a) Permanent Total Disablement
55. Health Insurance plan Includes
a) Health expense coverage b) Disability income insurance

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c) Both (a) and (b) d) None of these
Answer: d) None of these
56. Types of motor vehicle insurance policies CO3 Low Remembering
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a) 1 b) 2
c) 3 d) 4
Answer: c) 3
57. Types of Claims
a) 1 b) 2
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c) 3 d) 4
Answer: c) 3
58. Types of Fire Policies
a) 6 b) 7
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c) 8 d) 9
Answer: c) 9
59. Types of general insurance
a) 10 b) 11
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c) 12 d) 13
Answer: d) 13
60. Types of Law relating to general insurance CO3 Low Remembering
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a) 1 b) 2
c) 3 d) 4
Answer: c) 3
Unit – IV
Revised Blooms
Course
Outcome
(High / Low) Level
61. Deposit insurance was introduced in India in
a) 1965 b) 1962
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c) 1964 d) 1961
Answer: b) 1962
62. Deposit insurance was seen as a measure of protection to
a) Depositors b) Particularly small depositors

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c) Managing risk of loss d) all of the above
63. Credit insurance includes CO4 Low Remembering
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a) Increase sales b) Obtain financing
64. The type of credit institutions covered by the DICGC is
a) Commercial bank b) Cooperative bank

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65. The DICGC insures all deposits such as
a) Saving deposits b) Fixed deposits

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c) Current deposits d) all of the above
66. Which type of deposits does not included in the DICGC
a) Saving deposits b) Deposits of foreign government

c) Recurring deposits d) all of the above
Answer: b) Deposits of foreign government
67. Credit Guarantee Corporation of India ltd. Established in the year CO4 Low Remembering
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a) 1971 b) 1972
c) 1973 d) 1974
Answer: a) 1971
68. The Credit Guarantee Corporation of India ltd and DICGC were merged in
a) 1975 b) 1972
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c) 1978 d) 1974
Answer: c) 1
69. The public liability insurance is governed by public liability insurance Act
a) 1992 b) 1991
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c) 1996 d) 1994
Answer: b) 1991
70. Insurance is based on the principle of
a) Toxic substances b) In toxic substances

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c) No fault d) none of these
71. The main objective of GIC are CO4 Low Remembering
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a) Superintending of business b) Controlling of business
72. Which insurance Act governs the pattern of investment of insurance funds?
a) Insurance Act 1932 b) Insurance Act 1938

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c) Insurance Act 1933 d) Insurance Act 1935
Answer: b) Insurance Act 1938
73. The public Liability Act
a) 1992 b) 1991
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c) 1996 d) 1994
Answer: b) 1991
74. Oldest Insurance companies established in the year
a) 1943 b) 1944
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c) 1946 d) 1947
Answer: d) 1947
75. General insurance corporation commenced business on CO4 Low Remembering
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a) 1971 b) 1972
c) 1973 d) 1974
Answer: c) 1973
76. The government nationalized the general insurance business in
a) 1971 b) 1972
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c) 1973 d) 1974
Answer: b) 1972
77. The insurance act were amended in
a) 1970 b) 1972
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c) 1974 d) 1975
Answer: d) 1975
78. Expand NIC.?
a) National Insurance Company b) National Indian Company

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c) National Improve Company d) National Impact Company
Answer: a) National Insurance Company
79. Expand AOA..? CO4 Low Remembering
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a) Any One Accident b) Any One Anywhere
c) Any One to Any One d) None of these
Answer: a) Any One Accident
80 Expand GIC..?
a) General Insurance Corporation b) General Insurance Committee

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c) General Insurance Company d) None of these
Answer: a) General Insurance Corporation
Unit – V
Revised Blooms
Course
Outcome
(High / Low) Level
81. The subject matter of marine insurance these days are
. a) Hull or ship b) Cargo or good

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b) Freight d) all the above
82. Marine insurance act was introduced in CO5 Low Remembering
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a) 1964 b) 1961
c) 1963 d) 1966
Answer: c) 1963
83. The document in which the contract is incorporated is called
a) Marine policy b) Comprehensive policy

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c) Open policy c) Garage insurance policy
Answer: a) Marine policy
84. From following points which persons are deemed to have insurable interest?
a) The owner of the ship b) The owner of the cargo

c) The mortgagor and mortgagee d) all the above
85. Marine insurance must contain all the essential requirements of a valid contract e.g.
a) Lawful consideration b) Free consent

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86. Marine loss may be classified into CO5 Low Understanding
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a) 2 categories b) 3 categories
c) 5 categories d) 4 categories
Answer: a) 2 categories
87. A policy in which the subject matter is insured for a definite period of time is called

Answer: a) Time policy
88. Which policy is very useful to merchants who regularly dispatch goods through ships?

Answer: d) Floating policy
89. PPI stands for
a) Policy Proof of Interest b) Port Proof of Interest

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c) Particular Proof of Interest d) all the above
Answer: a) Policy Proof of Interest
90. In marine insurance, implied warranties are CO5 Low Remembering
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a) Seaworthiness of ship b) Legality of venture
c) Non-deviation d) all the above
91. From following which principals apply in marine insurance
a) Principle of indemnity b) Principal of good faith

92. A promise in which insured gives to exist or not to exist certain facts is called
a) Promissory warranty b) Affirmative warranty

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Answer: b) Affirmative warranty
93. FPA Stands for
a) Free of performance average b) Free of partial average

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c) Free of particular average d) none of these
Answer: c) Free of particular average
94. In marine insurance ‘Average’ means CO5 Low Remembering
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a) Partial loss b) loss
c) Property loss d) none of these
Answer: b) loss
95. Marine insurance contract section..?
a) Section 20 b) Section 21
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c) Section 22 d) Section 23
Answer: c) Section 22
96. Types of Marine Losses
a) 6 b) 7
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c) 8 d) 9
Answer: a) 6
97. Types of policy
a) 6 b) 7
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c) 8 d) 9
Answer: d) 9
98. The doctrine of contribution also applies to CO5 Low Understanding
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a) Fire Insurance b) Life insurance
c) Marine insurance d) All of the above
Answer: c) Marine insurance
99. Types of essential elements or principles of marine insurance
a) 6 b) 7
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c) 8 d) 9
Answer: c) 8
100. Policy of marine insurance covered under section
a) Section 24, 25, 26 b) Section 21, 22, 23

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c) Section 22, 23, 24 d) Section 23, 24, 25
Answer: a) Section 24, 25, 26.
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PART – B (6 Marks)
(Minimum 10 Question from Each unit, no maximum limit)
Unit – I
Revised Blooms
Course
S.No Questions Taxonomy Level Cognitive
Outcome
(High / Low) Level
1. Give Meaning and definition of risk
Ans:
Meaning and definition of risk
1. In the world of finance, risk management refers to the practice of identifying potential risks in
advance, analyzing them and taking precautionary steps to reduce/curb the risk. CO1 Low Remembering
2. When an entity makes an investment decision, it exposes itself to a number of financial risks.
3. The quantum of such risks depends on the type of financial instrument.
4. These financial risks might be in the form of high inflation, volatility in capital markets,
recession, bankruptcy, etc.
2. Define Source of Risks & Difference between External and Internal source of risks. CO1 Low Understanding
Ans:
Classification of risks
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The purpose of this classification is to draw attention to the correct risk treatment procedures and
responsibilities, depending on the type of risk
3. Differentiate between speculative and pure risks.
Difference between speculative and pure risks
Basis Pure Risk Speculative Risk

Pure risk involves no possibility of
Speculative Risk involves three possible
Meaning gain; either a loss ocurrs or no loss CO1 Low Understanding
outcomes: loss, gain or no change
ocurrs
An example of pure risk is the risk Trading in stock market may result in making
Example of becoming disabled as a result of either a profit or loss or neither a profit nor
illness or injury. loss i.e. no change in the investment value.
Pure risk - the risk of loss without
Insurance the possibility of gain- is the only Speculative Risk cannot be insured
type of risk that can be insured.
4. Explain risk management process.
Risk management process
A more disciplined process involves using checklists of potential risks and evaluating the CO1 Low Remembering
likelihood that those events might happen on the project.
Some companies and industries develop risk checklists based on experience from past projects.
5. Explain the Nature of insurance. CO1 Low Remembering
Nature of insurance
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Insuring anything other than human life is called general insurance.
Examples are insuring property like house and belongings against fire and theft or vehicles
against accidental damage or theft.
6. What are the Essential requirements of an insurable risks
As a practical matter, many risks that are insured privately meet these requirements only partially
or, with reference to a particular requirement, not at all.
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Thus, in a sense, the requirements listed describe those that would be met by the ideal risk.
Nevertheless, the bulk of the risks insured fulfill—at least approximately—most of the
requirements.
7. Write the Principles of insurance contract
Nature of contract is a fundamental principle of insurance contract.

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An insurance contract comes into existence when one party makes an offer or proposal of a
contract and the other party accepts the proposal.
8. Explain the objectives if IRDA CO1 Low Remembering
Answer:
To promote the interest and rights of policy holders.

To promote and ensure the growth of Insurance Industry.
To ensure speedy settlement of genuine claims and to prevent frauds and
malpractices
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To bring transparency and orderly conduct of in financial markets dealing
with insurance.
9. Explain the organisation setup of IRDA
Answer:
IRDA - Insurance Regulatory Development and Authority is the statutory, independent and
apex body that governs and supervise the Insurance Industry in India.
It was constituted by Parliament of India Act called Insurance Regulatory and

Development Authority of India (IRDA of India) after the formal declaration of Insurance Laws
(Amendment) Ordinance 2014, by the President of India Pranab Mukherjee on December CO1 Low Understanding
26,2014
IRDA Act was passed upon the recommendations of Malhotra Committee

report (7 Jan,1994), headed by Mr R.N. Malhotra (Retired Governor, RBI)
Main Recommendations - Entrance of Private Sector Companies and Foreign
promoters & An independent regulatory authority for Insurance Sector in
India
In April,2000, it was set up as statutory body, with its headquarters at New Delhi.
The headquarters of the agency were shifted to Hyderabad, Telangana in 2001.
10. Define Privatization of insurance. CO1 Low Remembering
To develop the competition in the business of insurance and to make both the private and
public sector to work efficiently in the insurance business.
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Privatization of Insurance eliminated the monopolistic business of Life Insurance Corporation
of India
Unit – II
Revised Blooms
Course
Outcome
(High / Low) Level
11. What are the Features of life Insurance

1. Elements of a Valid Contract
2. Insurable Interest
3. Utmost Good Faith
4. Warranties CO2 Low Remembering
5. Assignment and Nominations
6. Certainty of the event
7. Premium
8. Terms of policy
12. Give short note on Life Insurance Corporation Act-1956 CO2 Low Remembering
The Life Insurance Corporation of India is the largest insurance and investment group owned by
Indian State with assets, funds and policies.
The Parliament enacted the Life Insurance Corporation Act in 1956 which came into force on
July 1, 1956.
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After the enactment, the private insurance groups were nationalized and many insurance and
provident societies were combined to form Life Insurance Corporation under the ownership of the
State.
13. List the Advantages of Life Insurance.
1. Protection
2. Aids thrift
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3. Enhances creditworthiness
4. Tax relief
5. Provides liquidity
14. Define Policy
Policies and procedures are designed to influence and determine all major decisions and actions,
and all activities take place within the boundaries set by them.
Procedures are the specific methods employed to express policies in action in day-to-day CO2 Low Remembering
operations of the organization.
Together, policies and procedures ensure that a point of view held by the governing body of an
organization is translated into steps that result in an outcome compatible with that view.
15. Explain the types of Policies CO2 Low Understanding
Whole-life policies, a type of permanent insurance, combine life coverage with an investment
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fund. Here, you're buying a policy that pays a stated, fixed amount on your death, and part of
your premium goes toward building cash value from investments made by the insurance
16. What are the rights available under life Insurance policies
There is no express provision for assignment of contracts under the Indian Contract Act. CO2 Low Remembering
Section 37 of the Act provides for the duty of parties of a contract to honor such contract
17. Define Nomination.
We expect him to get the Democratic nomination.
Membership is by nomination only.

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The novel earned a nomination for the National Book Award.
The film received five Academy Award nominations.
The nominations for the Academy Awards have been announced.
18. What is Title Insurance Policy
Title insurance for mortgage lenders title insurance is called a Loan Policy.
Most lenders require a Loan Policy when they issue a mortgage loan. CO2 Low Remembering
The Loan Policy is usually based on the dollar amount of the loan and it protects the lender's
interests in the property should a problem with the title arise.
19. Define Claims. CO2 Low Remembering

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A formal request to an insurance company asking for a payment based on the terms of the
insurance policy.
Insurance claims are reviewed by the company for their validity and then paid out to the insured
or requesting party once approved.
20. Write the features of LIC.
Life insurance both promotes and mobilizes saving in the country.
The income tax concession provides further incentive to higher income persons to save through
LIC policies.
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The total volume of insurance business has also been growing with the spread of insurance-
consciousness in the country.
The total new business of LIC during 1995-96
1. Term Financing Institution, 2.Investment Institutions, 3.Stabiliser in Share Market.
Unit – III
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Revised Blooms
Course
Outcome
(High / Low) Level
21. Give short note on Important of General Insurance
1. Promoting Financial stability
2. Substitute for and complements government welfare program
3. Facilitating trade and commerce CO3 Low Remembering
4. Encouraging loss mitigation
5. Fostering more efficient allocation of capital
6. Helps to manage risk
22. Explain Fire Insurance Contract
Fire insurance contract may be defined as "an agreement”,

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whereby one party in return for a consideration undertakes to indemnify the other party against
financial loss which the latter may sustain by reason of certain defined subject-matter being
damaged or destroyed by fire or other defined perils up to an agreed amount."
23. Give short note on Nature of fire insurance CO3 Low Remembering
1. Written contract
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2. Two parties
3. Period of insurance
4. Only protection element
5. Use of word Insurance
24. What are the Characteristics of a fire insurance Contract
1. Indeminity contract
2. Utmost good faith

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3. Period
4. Insurable Interest
5. Actionable claim
25. Explain the Principle of subrogation and Contribution
1. Subrogation: The subrogation means in fact the substitution of the insurer in place of the
insured as the rightful claimant of the right to the possession of the insured property after the
insured has been compensated.The principle of subrogation prescribes that the scrap or whatever
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is left of the damaged subject matter of insurance, to be automatically passed into the hands of the
insurer after the payment of claim.
2. Contribution : The right of an insurer who has paid a loss under policy to cover a
proportionate amount from other insurers who are liable for the loss.
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26. Explain about Double Insurance.
Situation in which the same risk is insured by two overlapping but independent insurance policies.
It is lawful to obtain double insurance, and the insured can make claim to both insurers in the
event of a loss because both are liable under their respective polices. CO3 Low Remembering
The insured, however, cannot profit (recover more than the loss suffered) from this arrangement
because the insurers are law bound only to share the actual loss in the same proportion they share
the total premium. Also called dual insurance.
27. What is Motor Vehicle Insurance?
This policy covers all types of vehicles plying on public roads such as:-
1. Scooters & Motorcycles

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2. Private cars
3. All types of commercial vehicles
4. Motor Trade (vehicles in show rooms and garages)
28. Explain the Nature of Motor Insurance
1. Unilateral
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2. Executory
3. Conditional
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29. Explain Claims and Recovery/settlement under motor vehicle insurance
1. The insured’s vehicle is damaged or any loss incurred

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2. Any legal liability is incurred for death of or bodily injury
3. Or damage to the third party’s property
30. What is mean by Compulsory Motor vehicle insurance
1. Accident caused by external means.
2. Man made calamities, such as Explosion, Burglary, Theft, Riots & Strikes,Malicious Acts,
Terrorism,
Etc
3. Natural calamities like Earthquakes, Fire, Floods, Typhoons, Hurricanes, Storms, Cyclones,
Lightning, etc.
4. While in Transit by rail/road, air or waterway.
5. Third party legal liability
6. Cover for an owner driver in case of death
Unit – IV
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Revised Blooms
Course
Outcome
(High / Low) Level
31. Explain the Meaning and nature of deposit insurance
Meaning: of 'Deposit Insurance Fund - DIF' A fund that is devoted to insuring the deposits of
individuals by the Federal Deposit Insurance Corporation (FDIC). CO4 Low Remembering
The Deposit Insurance Fund (DIF) is set aside to pay back the money lost due to the failure of a
financial institution.
32. Point out the Advantages and disadvantages of deposit insurance shame
Advantage of deposit insurance is clear: it did stop bank runs with the resulting bank failures, and
gave people a greater confidence in the financial system CO4 Low Remembering
Disadvantage often argued is that deposit insurance cause’s moral hazard that motivates bank
managers to take bigger risks because their depositors are insured.
33. Explain about Credit insurance.
Credit insurance is a type of life insurance policy purchased by a borrower that pays off one or
more existing debts in the event of a death, disability, or in rare cases, unemployment. CO4 Low Remembering
Credit insurance is marketed most often as a credit card feature, with the monthly cost charging a
low percentage of the card's unpaid balance.
34. Explain the Nature of credit insurance CO4 Low Remembering
Page 40 of 66
Question Bank

1. Increase Sales.
2. Obtain Financing
3. Reduce the risk
4. Save time and money
5. Finance Customers
6. Gain Leverage
35. What are the Terms and conditions of insurance
1. Copyright Statement
CO4 Low Remembering
2. Hyper linking Policy
3. Online Payment Terms & Conditions
36. Explain the Claims and recovery of credit insurance
1. Promptly reported
CO4 Low Remembering
2. Paid by draft drawn
3. Designated as the representative for the insurer
37. Describe the types of credit insurance CO4 Low Remembering
1. Credit life insurance
Page 41 of 66
Question Bank

2. Credit disability insurance
3. Credit Involuntary Unemployment insurance
4. Credit property insurance
38. Point out the Benefits of credit insurance
1. Benifits of credit insurance to debtors CO4 Low Remembering
2. Benefits of credit insurance to a business
39. Explain the Deposit insured under DICGC
1. Savings deposit
2. Fixed deposit CO4 Low Remembering
3. Current deposit
4. Recurring deposit
40. What are the Scope of deposit insurance act in India
1. Commercial banks CO4 Low Remembering
2. Cooperative banks
Unit – V
Page 42 of 66
Question Bank

Revised Blooms
Course
Outcome
(High / Low) Level
41. Explain Nature of Marine Insurance
1. The owner of the ship

CO5 Low Remembering
2. The owner of the cargo
3. The Mortgagor and mortgagee
42. List the Scope/Types of marine insurance.
1. Hull insurance
2. Cargo insurance CO5 Low Remembering
3. Fright insurance
4. Liability insurance
43. Explain about Voyage. CO5 Low Remembering
1. A financial protection plan that provides coverage for goods in transit by sea.
2. In order for a voyage policy to be valid, the vessel transporting the cargo must be in good
condition and capable of making the journey and the vessel's crew must be competent.
3. This requirement exists because a voyage policy, like any insurance policy, is intended to
Page 43 of 66
Question Bank

protect against unforeseen risks, not against preventable risks.
4. Voyage policies are important in the export business. A voyage policy may also be called
"marine cargo insurance."
44. List out the types of Marine Losses
1. Total loss
i) Actual Total Loss
ii) Presumed Total Loss

CO5 Low Remembering
iii) Constructive Total Loss
2. Partial loss.
i) General Average
ii) Particular Average
45. Differentiate general and particular average loss. CO5 Low Understanding
1. General average is incurred for the benefit of all interests but the
Particular average is in connection with any of the interests.
2. General average is always voluntary and intentional but the
Particular average is an accidental or fortuitous.
Page 44 of 66
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3. General average is shared by all those who are benefited by the general average act.
Particular average is paid by the insurer.
4. General average may include expenditure and sacrifice along with loss, whereas the
Particular average results from a loss or damage.
46. Explain about General average contribution.
General Average contribution is the monetary contribution required of ship-owners and cargo
owners in respect of general average expenditures and general average sacrifices.
Cargo's claim for general average contributions against the ship is secured by either a maritime CO5 Low Remembering
lien or a statutory right in rem.
The ship owner’s claim for general average contribution is secured by a possessory lien on the
cargo.
47. Explain about Measurement of loss. CO5 Low Remembering
1. Developments in relation to damages for late payment by insurers
2. Establishing the basis of the insured’s liability to a third party following Omega Proteins
Aspen Insurance
3. The relevance of commercial purpose to the construction of policy wordings in the light of
The EL Trigger Litigation
Page 45 of 66
Question Bank

4. Waiver and estoppels in relation to procedural conditions following Kosmar Villa Holidays
Syndicate 1243
5. The Third Parties (Rights against Insurers) Act 2010
6. The Law Commission’s review of consumer and business insurance
48. Explain about Contribution.
The principle holding that two or more insurers each liable for a covered loss should participate in
the payment of that loss.
Having paid its share of a loss, an insurer may be entitled to equitable contribution.
A legal right to recover part of the payment from another insurer whose policy was also CO5 Low Remembering
applicable.
1. Double Insurance
2. Contribution Principle Rules
3. Filing the Claim
49. Explain about Warranties.
1. Express warranties CO5 Low Remembering
2. Implied warranties
50. Explain about Under-Insurance. CO5 Low Remembering
Page 46 of 66
Question Bank

1. Average
2. General average
PART – C (10 Marks)

(Minimum 5 Questions from Each unit, no maximum limit)
Unit – I
Revised Blooms
Course
Outcome
(High / Low) Level
1. What is meant by Risk? Explain the Classification Risk. Low Remembering

Answer:
Business risk can be defined as uncertainties or unexpected events, which are beyond
control. In simple words, we can say business risk means a chance of incurring losses or less
profit than expected. These factors cannot be controlled by the businessmen and these can result
in a decline in profit or can also lead to a loss.
Classification Risk
I. Speculative Risk
II. Pure Risk
i.Personal risk
ii.Propetry risk
iii.Liability risk
iv.Risk arising from failures of others
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Question Bank

III. Acceptable Risk
IV. UnAcceptable risk
V. Dynamic risk
VI. Static risk
VII. Fundamental risk
VIII. Particular risk
2. List the Advantages and Disadvantages of insurance CO1 Low Remembering
Answer :
1.Advantages of insurance
2.Protection
3.Removes Worries
4.Cash Value
5.Tax Benefits
6.Flexibility
7.Affordability
Disadvantages of insurance
1. Opportunity Cost
2. Limbo
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Question Bank

3. Not Necessary
4. Confusing
5. Lack of Trust
3. Explain Insurance & its Characteristics of Insurance.
Term insurance is a type of life insurance policy that provides coverage for a certain period of
time, or a specified "term" of years.
If the insured dies during the time period specified in the policy and the policy is active - or in
force - then a death benefit will be paid.
Characteristics of Insurance
1. Risk Sharing
2. Risk Assessment CO1 Low Remembering

3. Cooperation
4. Payment at the time of contingency
5. Quantum of Compensation
6. Larger the number, better the care
7. Insurance by choice and not by chance
8. Insurance a Charity
4. Describe the Function of IRDA CO1 Low Remembering
Page 49 of 66
Question Bank

Answer:
1.It issues the registration certificates to insurance companies and regulates them.
2.It protects the interest of policy holders.
3.It provides license to insurance intermediaries such as agents and brokers after specifying the
required qualifications and set norms/code of conduct for them.
4.It promotes and regulates the professional organisations related with insurance business to
promote efficiency in insurance sector.
5.It regulates and supervise the premium rates and terms of insurance covers.
6.It specifies the conditions and manners, according to which the insurance companies and other
intermediaries have to make their financial reports.
7.It regulates the investment of policyholder's funds by insurance companies.
8.It also ensures the maintenance of solvency margin (company's ability to pay out claims) by
insurance companies.
5. Elaborate the Principles of risk Insurance & Classification of Insurance. CO1 Low Understanding
1. Principle of cooperation and pooling of resources
2. Principle of probability and law of large numbers
Classification of Insurance
1. Life Insurance
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Question Bank

2. Fire Insurance
3. Marine Insurance
4. Miscellaneous Insurance
Unit – II
Revised Blooms
Course
Outcome
(High / Low) Level
6. Explain the Law relating to life Insurance.
Term life insurance is the simplest and least expensive type, as it pays benefits only upon the
policy holder's death.
With annual renewable term insurance, the policy holder pays a low premium at first, which CO2 Low Remembering
increases annually as he or she gets older.
With level term insurance, the premium amount is set for a certain number of years, then increases
at the end of each time period.
7. Explain Assignment of policy. CO2 Low Remembering
A life insurance assignment is a document that allows you to transfer the ownership rights of your
policy to a third party, transferring to that third party all rights of ownership under your policy,
including the rights to make decisions regarding coverage, beneficiary and investment options.
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1. Abolute Assignment
2. Conditional Assignment
3. Procedures of Assignment
8. List the Differences between assignment and Nomination.
1. Method
2. Ownership
3. Revocation
4. Rights
CO2 Low Remembering
5. Cancellation
6. Dealing
7. Payment
8. Consideration
9. Purpose
9. What are the Concept of trust in Life Policy? CO2 Low Remembering
1. The Beneficiary of the policy
2. Policyholder cannot borrow from the policy
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3. Life insurance trust must be irrevocable
4. Premium payments
10. Explain Life Insurance corporation of India & Role of LIC.
1. Feature of LIC
2. Objective of LIC
3. Role of LIC
4. Functions of LIC
CO2 Low Remembering
5. Investment pattern of LIC
Role of LIC
1. Life insurance as "Investment"
2. Life insurance as "Risk cover"
3. Life insurance as "Tax planning"
Unit – III
Revised Blooms
Course
Outcome
(High / Low) Level
Page 53 of 66
Question Bank

11. List the types of general insurance.
1. Fire Insurance
2. Credit insurance
3. Business and commercial insurance
4. Travel Insurance CO3 Low Remembering
5. Locked funds Insurance
6. Automobile Insurance
7. Marine Insurance
8. Home Insurance
12. Distinction between life insurance and general insurance.
1. Nature of contract
2. Compensation CO3 Low Remembering
3. Contract of Indemnity
4. Insurable interest
13. How many types of Claims are there? CO3 Low Remembering
1. Loss of assets including stock
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Question Bank

2. Loss of fixed assets
3. Loss of profit
14. What are the kinds of Motor vehicle insurance policies?
1. Act/Liability policy
CO3 Low Remembering
2. Third-Party policy
3. Package/Comprehensive Policy
15. How many types of claims settlement are there?
1. Claims for Own Damage
2. Claims for Third party

CO3 Low Remembering
3. Claims for Personal injury
4. Claims for Theft or total loss claims
5. Claims for Property damage
Unit- IV
Revised Blooms
Course
Outcome
(High / Low) Level
Page 55 of 66
Question Bank

16. Explain about credit and deposit insurance.
1. Credit life insurance
2. Credit disability insurance
3. Credit Involuntary Unemployment insurance
4. Credit property insurance CO4 Low Remembering
5. Savings deposit
6. Fixed deposit
7. Current deposit
8. Recurring deposit
17. Summaries the Deposit insurance and credit guarantee corporation DICGC.
1. Capital and management in DICGC

CO4 Low Remembering
2. Schemes under DICGC
3. Scope of deposit insurance act in India
18. Explain about public liability insurance. CO4 Low Remembering
1. Meaning of public liability insurance
2. Policy
Page 56 of 66
Question Bank

3. Scope of cover
4. Condition
19. What are Functions of GIC?
1. To encourage policy-makers to promote the participation of women in political, legislative,

social, economic and cultural processes; CO4 Low Remembering
2. To promote youth participation in political, legislative, social, economic and cultural processes;
3. To support and strengthen, through partnerships and networks,
20. Explain Nature, terms and conditions .
1. The insurance contract did not cover the event which led to the loss or damage;
2. You acted contrary to what was stipulated in the contract; CO4 Low Remembering
3. The property being claimed for was not insured under the contract; or
4. The contract had been terminated, for whatever reason, before the event that led to the claim.
Unit – V
Revised Blooms
Course
Outcome
(High / Low) Level
Page 57 of 66
Question Bank

21. What are the essential elements or principle of marine insurance?
1. Fundamentals of general contract
2. Utmost good faith
3. Warranties CO5 Low Remembering
4. Contribution
5. Insurable interest
6. Causa proxima
22. List out the types of Policy.
1. Voyage policy
2. Time policy
3. Mixed policy CO5 Low Understanding
4. Valued policy
5. Open policy
6. Floating policy
23. Explain the Law relating to marine insurance. CO5 Low Remembering
1. Contract of marine insurance
Page 58 of 66
Question Bank

2. Freight
3. Insurable property
4. Marine adventure
5. Maritime perils
6. Policy
7. Ship
24. Explain about Contribution.
The principle holding that two or more insurers each liable for a covered loss should participate in
the payment of that loss.
Having paid its share of a loss, an insurer may be entitled to equitable contribution.
A legal right to recover part of the payment from another insurer whose policy was also CO5 Low Remembering
applicable.
1. Double Insurance
2. Contribution Principle Rules
3. Filing the Claim
25. Explain about Measurement of loss. CO5 Low Remembering
1. Developments in relation to damages for late payment by insurers
Page 59 of 66
Question Bank

2. Establishing the basis of the insured’s liability to a third party following Omega Proteins
Aspen Insurance
3. The relevance of commercial purpose to the construction of policy wordings in the light of
The EL Trigger Litigation
4. Waiver and estoppels in relation to procedural conditions following Kosmar Villa Holidays
Syndicate 1243
5. The Third Parties (Rights against Insurers) Act 2010
6. The Law Commission’s review of consumer and business insurance
PART – D (10Marks)
(Minimum 2 Questions from Each unit, no maximum limit)
Part D should be Analytical in nature. This question should provide an opportunity to students to apply creativity / logic to answer.
Unit – I
Revised Blooms
Course
Outcome
(High / Low) Level
Page 60 of 66
Question Bank

1. Do you agree that minimization of risk can be done, by taking necessary precautions. As
opposed to the uncertainty that cannot be minimised?
Ans:
The risk is defined as the situation of winning or losing something worthy. Uncertainty is a
condition where there is no knowledge about the future events.
CO1 High Analytical
Risk can be measured and quantified, through theoretical models. Conversely, it is not
possible to measure uncertainty in quantitative terms, as the future events are unpredictable.
The potential outcomes are known in risk, whereas in the case of uncertainty, the outcomes
are unknown.
Risk can be controlled if proper measures are taken to control it. On the other hand,
uncertainty is beyond the control of the person or enterprise, as the future is uncertain.
2. Pure Risk has no concern with profit. Do you agree?
CO1 High Analytical
Ans: Yes. Because pure risk is only concern about loss occurrence due to uncertainty.
Unit – II
Revised Blooms
Course
Outcome
(High / Low) Level
3. Justify that, the life Insurance is not a contracts of Indemnity. CO2 High Analytical
Ans: Yes it is not. Because life insurance provides an assurance to the insured to pay certain
sum of money in lieu of premium on the death of the insured or on the maturity of policy
whichever is earlier. As such, it provides financial protection against the risk of early death.
Page 61 of 66
Question Bank

Life insurance involves both the elements of protection and investment as in case the insured
lives up to the maturity of the policy, the investment made by the insured in the form of
periodical premium is paid back to the insured on the maturity of the policy.
Life insurance, usually referred to as ‘life assurance’ insures the insured against the
happening of certain event i.e., death etc. The life insurance contract can be described as
‘contingent contract’ because the loss of life cannot be compensated and only a specified
sum of money is paid if the insured dies.
4. Express the possibility of double Insurance policies and getting maturity value of insurance
under life insurance contract.
Ans:
Yes. There is a possibility to go for double insurance policies. A person can get more than CO2 High Analytical
one policy from one insurer and even from different Insurance companies. He can get the
maturity value of all policies himself if he survives up to the maturity of policies. Even in
case of death of insured his claimant can get the compensation from all the Insurance
Companies.
Unit – III
Revised Blooms
Course
Outcome
(High / Low) Level
5. Mohan gets the fire Insurance policy on his household goods worth Rs. 20,000 for one year. After CO3 High Evaluating
two months from the date of policy, his wife quarrelled with him and set fire to destroy the whole
Page 62 of 66
Question Bank

insured goods in anger. Can Mohan get the claim from insurance company?
Ans:
Yes, he is in a position to get the compensation for loss from the insurance company. In this case, the
damage to goods has been caused by fire though Mohan and his wife quarrelled and the wife set fire
to the goods. This was not a deliberated fire. A loss which is the direct consequence of fire is
supported by causa proxima and as such the loss occurred in this case is covered under the policy. So,
Mohan is entitled to recover the loss under the fire insurance policy.
6. Two adjoining houses were insured against fire. A storm caused 1st house to fall and as a
consequence fire broke out which damaged the 2nd house. Is the insurance company liable for the
loss caused to second house?
Ans: Yes. The insurance company is liable for the loss caused to 2nd house. Here, the insurer’s CO3 High Evaluating
liability is determined with reference to proximate cause. As per the principle of proximate cause the
insurance company is liable against all direct losses by fire. Here the loss was due to fire and which
was not deliberate act.
Unit- IV
Revised Blooms
Course
Outcome
(High / Low) Level
7. Do you agree that, there is a possibility of claim under Public Liability Insurance even the loss CO4 High Analytical
caused due to the negligence acts of employer?
Page 63 of 66
Question Bank

Ans: Yes the claim can be done under Public Liability Insurance. Because, The Insurance
company promises to indemnify the loss caused to third party, resulting in death or injury or
fatal accident with third party or loss of third party’s property, due to the negligence acts of
employer, his employees or insured’s property.
8. Conclude presents of the restrictions for the Ombudsman.
Ans:
Yes, the Ombudsman do have some restrictions. The Ombudsman has to deal with the complaints of
insured within the powers entrusted to them under law to act as an advisor, counsellor, adjudicator, it
prescribes everthing.
But there are certain restrictions as the ombudsman cannot look into all sorts of complaints.
1. The restrictions are that they can complain only in respect of a few items which have been
prescribed in the notification and that also mostly relates to claims. CO4 High Analytical
2. Claims includes the delay in the time to settle the claim, supposing the company takes a very
long time to settle the claims, they can come to ombudsmen with subject to, the above mentioned
points where they should have made a representation, not have gone to consumer court, one year
should not have elapsed, all these conditions are to be met with.
3. Then also against repudiation, whether it is a total repudiation, or part settlement/part

repudiation. There is also a clause wherein they can come to an ombudsman on the legal
construction of the policies in so far as they relate to claims. Also on non-issue of documents after
receipt of premium. Premium itself can be a subject matter of dispute-premiums paid or premiums
payable. So there are five subjects on which they can complain to ombudsmen.
Page 64 of 66
Question Bank

Unit – V
Revised Blooms
Course
Outcome
(High / Low) Level
9. A insured goods which were in transit on board a ship and sold the same goods to Z. The goods were
subsequently lost by a peril insured against. Z as the assignee of the policy, filed claim to recover the
money due under the policy, but the insurance company contends that Z has no insurable interest in
the goods at the time they were insured. Whether ‘Z’ will succeed in getting the claim?
Ans:
CO5 High Evaluating
Yes, Z will succeed in getting the claim, because, in the Marine Insurance Contract, the loss can only
be claimed by a person who has insurable interest at the time of loss; whether he has or has not any
insurable interest in the goods insured at the time of effecting the policy is immaterial. In the present
case, Z is the owner of goods at the time of loss because he has purchased them from ‘A’. He
acquires an insurable interest in the goods. So it is the loss of Z if the goods are lost in transit and he
will succeed in getting the compensation for loss.
10. A Ship caught fire while on voyage and the fire caused damage to some cargo belonging to XY Ltd. CO5 High Evaluating
In putting out the fire by water, some Cargo of AB Exporters was also damaged. Discuss if XY Ltd.
Or AB Exporters can claim damages on general average contribution clause from the owner of the
other interests in the ship and cargo.
Ans:
Yes. AB Exporters are entitled to general average contributions from the owner of the ship and cargo
whereas XY Limited cannot claim damages on general average clause. The question of general
Page 65 of 66
Question Bank

average contribution arises when there is general average loss. A loss caused by or directly
consequential on a general average expenditure as well as general average sacrifice is called general
average loss. It is an extraordinary expenditure voluntarily incurred at the time of perils for the
purpose of preserving the property imperilled in common adventure.
Page 66 of 66

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Revised on 14-11-2018

RATHINAM COLLEGE OF ARTS AND SCIENCE (AUTONOMOUS)

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

1. Risk Management includes __________

a)Financial In situations b) Non-Financial Institutions

Answer: c) Both (a) and (b)

2. To be insurable, a risk must have potential losses that are

a) Under the control of the insured b) Centrally located

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

a) Un measurable risks b) Insurable risks

Answer: a) Un measurable risk

4. from the following which is not included in external risk

a) Market condition b) Political environment

Answer: c) Worker’s strike

a) Dynamic risk b) Business risk

Answer: b) Business risk

a) Pure risk b) Liability risk

Answer: d) Insurable risk

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

a) An event or condition that increases the chance of loss

b) The uncertainty concerning loss.

d) The actual cause of the loss.

Answer: d) The actual cause of the loss

8. Which risk may give loss or profit?

a) Pure risk b) Liability risk

Answer: c) Speculative risk

9. A contract by which one party undertakes in consideration for payment is called

10. Insurance includes ___________ CO1 Low Remembering

a) Risk sharing b) Cooperation

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

Answer: d) All of the above

11. Which requisites are not essential for insurance contract?

a) Free consent b) Onetime payment

Answer: b) Onetime payment

12. Risk insurance is important for

a) Transfer of loss b) Development of economy

Answer: c) Both (a) and (b

13. Which is not included in the function of insurance?

a) Provide information b) Provide protection

Answer: a) Provide information

14. Free consent is not caused by CO1 Low Remembering

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

c) Mistake d) all of the above

Answer: d) all of the above

15. General insurance is of the following types

a) Fire Insurance b) Marine insurance

c) Principle of performance d) all of the above CO1 Low Remembering

Answer: d) all of the above

16. IRDA has come into operation from

17. Which is included in the general policy?

a) Whole life policy b) Endowment policy

Answer: d) Marine insurance policy

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

a) Date of payment b) Time of maturity

Answer: d) all of the above

19. Which is important term in insurance?

Answer: d) all of the above

Degree: B.Com Subject: Principles of Insurance 17BCM43B Sem : IV

Answer: c) all of the above

22. The word ‘Assurance’ is used for

a) Fire Insurance b) Marine insurance

Answer: d) Life insurance

23. The cost of insurance is determined using