PART - 1
1 Loss of income derived from a property is an example of:
(a) Personal risk
(b) Property risk
(c) Liability risk
(d) Financial risk
3 A car insurance policy with an excess of 800 in order to reduce the amount of the
regular premium is considered to be:
(a) Self insurance
(b) Risk transfer
(c) Partial risk retention
(d) Complete risk retention
5 When a financial planner is assessing insurance needs for his/her client, the financial
planner should always:
(a) Make sure the client has life cover
(b) Identify any risks that the client may be exposed to and recommend strategies to
address those risks
(c) Recommend the client consult an insurance broker to identify risks the client is
exposed to
(d) Identify current investments, the risks associated with those investments and
recommend strategies to address those risks
10. Which of the following client categories are considered to be a high-risk group with
regards to accidental death or injury?
(a) Young adult
(b) Young family
(c) Over 40s
(d) Mature adult
14. Liability arising from the ownership or occupation of a property is an example of:
(a) Fixed liability
(b) Personal liability
(c) Speculative liability
(d) General liability
15. Capital Required = Living Expenses x Years Required. This is the formula for the:
(a) Future value approach
(b) Annuity approach
(c) Needs approach
(d) Multiple approach
16. Prakash earns 55,000 p.a. He estimates that his family would require 80% of his
income in the event of his death or disability. Using the annuity approach, what is the
required lump sum if the investment returned 5% per annum?
(a) 2,750,000
(b) 220,000
(c) 1,40,000
(d) 880,000
18. The two differences when considering funding a short or long term disability,
rather than death, are medical and maintenance costs. Examples of this are:
I. Modifications to the house for wheelchair access
II. II. Chiropractic treatment
III. III. Annual living expenses, including those of the client
IV. IV. Funeral expenses
(a) I and II only
(b) I, II and IV
(c) I, II, and III
(d) I, II, III and IV
19. Income Protection provides cover for up to 75% of normal income. Why doesn't it
provide a greater level of cover?
(a) Any more than 75% might be a disincentive to return to work
(b) As Income Protection payments are tax free, 75% of salary after tax is close to 40%
of salary before tax
(c) It is assumed that sick leave will provide the gap of 25%
(d) It is assumed that workers compensation will provide the gap of 25%
20. Which of the following is NOT a control measure, which may be used to reduce
property risk?
(a) Extinguishers and fire blankets
(b) An excess on the house and contents insurance
(c) Car alarm
(d) Cutting back trees around the home
21. Your house cleaner, Kylie, breaks her arm in your home. What insurance would
provide the most comprehensive cover?
(a) None, Kylie should have her own Income Protection Insurance
(b) Home Insurance
(c) Contents Insurance
(d) Domestic Workers Compensation Insurance
22. What are the two main types of life insurance premiums?
(a) Level and Stepped
(b) Uneven and Level
(c) Even and Stepped
(d) Variable and Flat
24. In the event of the life insured committing suicide, what would happen under a
term life policy?
(a) A claim would be paid in full if the policy had been in force for at least 12 months
(b) Partial claim paid, depending on length the policy has been in force
(c) The claim would be paid if the policy had been in force for at least 13 months
(d) A claim will never be paid in this situation
25. With regards to TPD, the broad definition of being totally and permanently disabled
is the 'the insured is unable to return to work'. Can a homemaker then, be covered for
TPD?
(a) No, as a homemaker is technically unemployed
(b) Yes, but the homemaker must choose their desired definition of TPD from a number
of options at time of application
(c) Yes, but only if they are gainfully employed elsewhere at least on a part-time basis
(d) Yes, but there may be a separate definition of TPD applied
26. What is the term used for the insured's right to renew their life insurance policy
regardless of changes to medical status?
(a) Right to renew
(b) Guaranteed renewable
(c) Right to continue
(d) Guaranteed continuance
27. Some whole of life and endowment policies have a surrender value which gives
rise to the 'non forfeiture' principle. Which of the following best describes the 'non
forfeiture' principle?
(a) The ability to 'skip' a premium without the policy lapsing (so long as the
accumulated unpaid premiums, plus interest, do not exceed the surrender value)
(b) The ability to 'skip' a premium without the policy lapsing (so long as the premium is
paid within 6 months)
(c) The ability to 'skip' a premium without the policy lapsing (so long as the premium is
paid within 12 months)
(d) The ability to 'skip' a premium without the policy lapsing (so long as the skipped
premium, plus interest, is added to the next premium)
29. A flat tax rate, limited liability to the value of ownership and separate legal entity
are all characteristics of a:
(a) Sole trader
(b) Partnership
(c) Company
(d) Trust
30. Which of the following can sue and be sued as a separate legal entity?
I. A sole trader
II. A partnership
III. A company
IV. A trust
(a) I, II and III
(b) I and II only
(c) III only
(d) I, II, III and IV
31. Are the premiums for a business insurance policy tax deductible?
(a) Yes
(b) No
(c) Yes, but only if the purpose of the policy is to cover a revenue loss
(d) Yes, but only if the purpose of the policy is to cover a capital loss
34. Major differences between underwriting life insurance and disability insurance are:
V. Death is a single event, disability can occur repeatedly
VI. II. Death is unpredictable, whilst demographic statistics
indicate likely events of disablement
VII. III. Death is permanent, disability may be permanent or
temporary
(a) I, II & III
(b) I & III
(c) III
(d) I & II
35. A financial adviser must demonstrate to the underwriter that they have considered:
(a) The insurer's requirements, for the proposed amount of cover, has been fulfilled
(b) Their clients ability to meet the cost of premiums
(c) Alternative methods to control or avoid the risk
(d) The amount of risk that the insurer is taking on by accepting the client
36. Step 2 in the insurance review process is, 'Establish changes in client
circumstances'. What would NOT be considered a 'change'?
(a) The client is made redundant
(b) The client wants their insurances reviewed more frequently
(c) The client's mother has permanently moved in
The client's marriage recently ended
Q4. The ease with which an asset can be converted into cash for an approximation of its
true value is referred to as the asset’s?
A. Return.
B. Critical mass.
C. Liquidity.
D. Margin.
Your client has entered into a partnership that offers an additional business interest of
450,000 in 10 years’ time or on earlier death or disability of his partner. Your client has
decided to fund this buy-sell arrangement by ten annual contributions, the first beginning
now. Assuming that the fund earns 7.0% per annum net returns, calculate:
Q5. The annual contributions (assuming that the partner survives for 10 years):
A. 30,439
B. 28,447
C. 35,111
D. 45,000
HINT :-
FVA= PMT * [ (1+k)n – 1] * (1+k) )
k
450,000 = PMT * (13.8614) * (1.07)
PMT = 450,000/14.7835
PMT = 30,439 (multiply by (1+k) because the annual contribution is made at beginning
of the period
Q6. The maximum amount your client has to raise immediately to meet the buy-sell
arrangement if the partner dies after 5 years from now.
A. 324,958
B. 312,700
C. 283,952
D. 262,700
HINT :-
FVA= PMT * [ (1+k)n – 1] * (1+k) )
k
FVA = 30,439 * [(1.07)5 – 1] * (1.07)
.07
FVA=30,439*6.15329 = 187,300
Max. Amount need to be raise = 450,000 - 187,300 = 262,700
Q7. Which amongst the following is a benefit that arises when a life insurance policy is
purchased?
A. It serves as an immediate source of funds for the repayment of loans.
B. It acts as a collateral for loans.
C. It frees properties from leasehold encumbrances.
D. It creates an immediate estate if the insured dies.
Solution :-
Annual Payment Period Discounted Value
PV Rate
20,000 15 0.3152 6,304
20,000 16 0.2919 5,838
20,000 17 0.2703 5,406
20,000 18 0.2502 5,005
DCF 22,553
Q9. A client recently purchased a new home for 150,000 including the lot valued at
40,000. How much insurance would you recommend that your client purchase to cover
full replacement of the house in the event of a loss?
A. 88,000
B. 110,000
C. 120,000
D. 150,000
HINT :-
Cost of new home less Value of the lot 150,000 – 40,000 = 110,000
Q10. In relation to life assurance, identify the incorrect statement amongst the following:
A. A joint-life policy is payable upon the death of the first of two or more lives insured
under the single contract.
B. A last survivor policy is payable upon the death of the last of two or more lives insured
under the single contract.
C. Even with renewable term insurance, the policy owner/insured would not be
permitted to renew the policy if he or she had contracted a terminal disease prior to
the renewal date.
D. With a level premium policy, level premiums in excess of the policy’s share of death
claims in the early years of the contract are accumulated at interest in a reserve.
Q12. An annuity that makes lifetime payments with the first payment made after one
period from issue is called a(an):
A. Life annuity immediate.
B. Life annuity due.
C. Annuity certain.
D. Annuity due.
Q13. A disability income policy that specifies a flat benefit amount may contain a
supplemental benefit granting the insured the right to increase the benefit amount in
accordance with increases in his earnings, if he can prove a commensurate increase in
income. The supplemental benefit contained in this policy is known as:
A. A cost-of-living adjustment (COLA) benefit.
B. A future purchase option benefit.
C. A partial disability benefit.
D. A guaranteed income contract (GIC) benefit.
Q15. Identify the correct statement among the following with regard to an insurer’s
quality rating on the insurer’s financial condition:
A. An insurer’s rating can affect its ability to attract new business.
B. A ratings downgrade can damage an insurer’s persistency.
C. In order to improve its rating an insurer may have to invest in highly conservative
investments.
D. All of the above.
Q17. The following are statements concerning contracts of insurance. Identify the
statement(s) that is/are correct.
I. Whenever the wording in an endorsement or rider is in conflict with the terms of the
policy to which it is attached, the endorsement or rider takes precedence.
II. One reason for exclusions in insurance policies is that the risks are covered by other
insurance.
A. I
B. II
C. All of the above.
D. None of the above.
Q18. All of the following statements regarding insurable interest are correct except:
A. A party has an insurable interest in a life insurance contract when he or she is subject
to a loss upon the death of an insured.
B. Only immediate family members can have insurable interest in each other’s lives.
C. Persons are presumed to have an insurable interest on themselves.
D. Generally, the person to have an insurable interest must give his or her consent before
a policy is issued, even if the applicant has an insurable interest.
2) A type of risk with high frequency but low severity is probably best handled by:
(a) A voidance
(b) Subrogation
(c) Self-insurance
(d) Under-Insurance
(a) A only
(b) B only
(c) C only
(d) A, B & C
4) LALGI is ___________.
(a) Private contribution guarantee scheme
(b) Private insurance
(c) Public benefit guarantee scheme
(d) Social insurance
7) A client explains that she only wants an insurance policy that will cover her family
against financial risk over the next five years, while she still has dependent children and a
large mortgage. It is unlikely her income will increase over this period. What type of
insurance is she looking for?
(a) An unit linked insurance plan
(b) Money back policy
(c) Term insurance with a level premium
(d) Term insurance with a stepped premium
(a) A
(b) B
(c) Both A & B
(d) Neither A nor B
13) Jigar was driving his car home from work, when a pit dug by the municipal
corporation in the road, remained open and unmarked. He met with an accident and had
to be hospitalised for 3 months. What are the insurance claims that can a rise from this
accident?
(a) Jigar can claim personal insurance for the accident, as it was not caused by
negligence on his part; the municipal corporation cannot claim third party loss
insurance to pay damages to Jigar, as it was negligent. Jigar can claim insurance
for damage due.
(b) Jigar can claim temporary disability insurance and insurance for his damaged car
(c) Jigar has to apply to the municipal corporation for damages, which the corporation
will pay out of its claims for liability to third party. His motor insurance will cover
damages to his car.
(d) Since the municipal corporation was negligent, it would not be able to lodge a claim
to recover payment of damages to Jigar. Jigar will only receive motor insurance
claims on his car.
14) Sujata was standing on the terrace of her building hanging out clothes. She
accidentally fell off and landed on the sunshield of the next floor, which crashed and
damaged the car of her neighbour parked below. What are the insurance claims that arise
from this event?
(a) Sujata can claim personal accident insurance. Both her neighbours will claim
property insurance for the freak accident.
(b) Sujata cannot claim accident insurance as the accident was caused by her negligence.
Her neighbours can claim property insurance cover for loss to their property
(c) Sujata’s neighbours will collect damages from her, which Sujata can pay out of
insurance cover for losses to third parties.
(d) Sujata’s neighbours will not be able to claim insurance, as the damage to their
property due to such freak accidents is not usually covered by insurance. Sujata will
be able to claim her accident insurance, as she did not fall intentionally.
a) A financial planner can persuade the client to consider the losses from permanent
disability and highlight the risks to the client and recommend an appropriate policy for
him.
b) If a client is not willing to bear the costs of premium, it can be assumed that he is
willing to bear the costs of risk retention. Insurance may not be necessary in such cases.
c) If losses that would occur to the client in the event of permanent disability are
higher than what he can bear, the client is better off buying insurance. The costs of
insuring against losses, which have lower probability of happening, will in any case
be lower.
d) The amount of insurance a person will buy depends on his perception of risks and their
impact on him. It would not be possible to persuade this client to buy more insurance.
16) Suresh has not bought accident insurance cover, though his two-wheeler is covered
for damages from accidents. He wears a helmet and drives carefully. What can you say
about his risk management?
(a) Suresh has insured the property risk. He controls some of his personal risk and
retains the rest of the risk.
(b) Suresh has controlled his personal risk and insured his property risk
(c) Suresh has not done anything to manage his risks and has to immediately go for
accident and personal risk cover. He cannot rely on third party damages alone to
cover the risk of the road.
(d) Suresh has transferred his personal risk to other drivers of the road, insured his
property risk and can claim damages is accidents are caused by third party
negligence.
17) Mrs.Kapoor, a 40-year-old widow, has a 8-year-old son. Her current savings are not
adequate to provide for her son’s post graduate studies however she will be able to save it
up by the time he finishes graduation i.e. when he is 20 years old. Mortality tables
indicate that her life expectancy is another 30 years. Which of the following is true?
(a) She needs to insure her life for 12 years
(b) She does not need to insure her life
(c) She needs to insure her life for 30 years
(d) She needs to insure her son’s life for 30 years
19) Premium on Motor Insurance policy doesn’t depend on which one of the following
factors?
(a) Zone of operation of the vehicle
(b) Insured Declared Value (IDV) of the vehicle
(c) Cubic capacity of the vehicle
(d) Age of the owner of the vehicle
20) All of the following statements describe the operation of a life annuity EXCEPT:
(a) Because of the interest factor, an annuitant is assured of receiving back more
than he or she paid in
(b) The annuitant is assured that he or she cannot outlive the length of time of the annuity
payments
(c) The emphasis is on the liquidation of the fund as opposed to its growth
(d) The older the annuitant is when he or she receives the first annuity payment; the
greater will be the amount of each payment
HINT:-
Range=265-45=220
22) Derive the ’Policy Cost Per Thousand’ with following data; Policy cost per thousand
conversion = 0.001 Interest rate selected equivalent to the after-tax rate of return = 4%
Dividend or Bonus = Rs.13000 <Death benefits =Rs.20, 00,000 <BR>Annual Premium =
Rs. 23,000. Cash surrender value at the end of current policy year = Rs.6,00,000 Cash
surrender value at the end of the previous policy year = Rs. 5,70,000
(a) Rs. 25.04
(b) Rs. 28.07
(c) Rs. 30.4
(d) Rs. 31.15
Solution (b)
2 Radha had the option of investing her retirement funds in PO (MIS) Or Bank deposits
or with private fund raisers. She could get her funds back with great difficulty when she
invested in 3rd option. This was a case of Radha
(a) Not understanding the risks
(b) Taking a gamble for high returns
(c) Succumbing to greed
(d) Exercising poor judgment.
(HINT : b c and d logically follow from a)
3 Mr. Kumar has suffered severe damages to his property (uninsured) because of a fire.
Thereby he suffered severe financial losses. This happened because he did not cover
(a) The investment risk
(b) The pure risk
(c) The speculative risk
(d) None of the above
5 Bhima the driver causes injuries to a pedestrian by rash driving of car. The injured
victim had to spend Rs.400 in treating his injuries. Bhima ‘s act has created liabilities
under
(a) Common law
(b) Contract
(c) Statue and Common law
(d) Statute only
8 Insurance is an agreement to
(a) Share the losses
(b) Spread the economic burden throughout the group
(c) Make the individual feel more secure
(d) All of the above
10 (A) The existence of insurance may make people to exert less effort to control losses
(B)It might also induce commitment of frauds against insured.
11 (A) Insurance companies reduce risk by predicting losses within narrow limits based
on the law of large numbers
(B) It is the increasing pool of resources accessible to an insurer that reduce the risk
of non payment.
13 An entrepreneur who was into manufacturing corrugate boxes also owned few
photocopying machines and also ran courier and fax services, sought a single
comprehensive protective non-life insurance cover from an insurance company. The
insurance company declined the business based on the principle of
A ) “ Measurability and definiteness of loss”
B) “ Large number of homogenous exposure units”
(a) Statement A alone is correct
(b) Statement B alone is correct
(c) Both statements A and B are incorrect
(d) Both statements A and B are correct
16 Insurance companies often offer the services of specialists and experts to industry in
different fields. This is for rendering advice on
(a) Reduction in uncertainties
(b) Loss prevention/minimization
(c) Indemnification
(d) None of the above
19 To cope with losses, total or partial, the steps to be taken include the following items
which are given here in a jumbled up manner. Order these in their correct or logical
sequences by indicating the correct ranking against each as 1,2 3
(A) Take into account potential impact of inflation
(B) Itemize and value assets exposed to loss
© Assess the size of potential income/liability losses
What is the probability that a car from the above pool of 40 cars has met with at least 3
accidents?
(a) 0.1
(b) 0.2
(c) 0.3
(d) 1.0
( Hint: the probability that a vehicle has met with 2 accidents is 0.90.Hence the
probability ha I has me with at least 3 accidents i.e. accident or more I –0.90=0.1)
29 Every employer is obliged to ensure that his employees get a safe and secure
workplace. In relation to the risks arising in the workplace which affects the employees,
cover is provided through
(a) Employees’ Provident fund
(b) Workmen’s compensation insurance
(c) Employees’ group life insurance
(d) Employees’ personal accidents insurance scheme
30 Besides meeting the essential requirement of a valid contract (offer and acceptance,
consideration etc ) the following must be there for a contract to be present.
(a) Duty of care
(b) Consensus ad idem
(c) Waiver and Estoppel
(d) None of these
32 In life insurance
(A) Consideration is the payment of premium by the insured
(B) Consideration is the payment of premium or the promise to pay future premiums
35 (A) Under the principle of indemnity, the amount payable by the insurer in the event
of contingency insured against happening, payment will be limited to the loss the insured
suffers.
(B) In certain forms of medical/health insurance, the principle of indemnity is applicable
36 Which among the following limits the applicability of the principle of indemnity in
insurance:
(a) The subject matter of insurance is the insured’s interest in that subject
(b) The maximum liability of the insurer is limited to the sum insured
(c) The sum insured may not always reflect the full value at risk
(d) The value at risk is usually the depreciated value
37 A person owns a flat worth (market value) Rs.200000. He had insured it only for Rs
1,50,000. The flat is damaged by an earthquake, which loss is assessed at Rs.40000.
Assuming the insurer applies the principle of Average to the loss, The insured will get a
claim payment of
(a) Rs.75000
(b) Rs.70000
(c) Rs.37900
(d) Rs.40000
(HINT: S.I/F.V.R*L=150000/200000*40000=75000)
41 In marine insurance claims, insurable interest must shown to exist at the time of
(a) Loss
(b) Contract
(c) Both a and b above
(d) None of the above
44 Because of the application of the doctrine of adhesion, the courts construe the terms of
insurance contracts in favor of
(a) The insured
(b) The insurer
(c) Depends on circumstances
(d) None of the above
45 (A) When an insurer makes an ex-gratia payment to the claimant, he is not entitled to
subrogation rights
(B) Because the insurer has already made a payment to the insured, he is within his rights
to claim subrogation.
48 (A) In life insurance where the proposer was born would be deemed a material fact.
(B) In personal accident insurance medical history would be deemed a material fact
53 Personal accident policies are not strictly contracts of indemnity and hence principles
of subrogation and contribution are not applicable there under. The insured can claim in
respect of injuries sustained by him as well as recover damages from the negligent third
party who has caused the injuries.
(a) True
(b) False
54 Sunil insured the building of his house for a sum of Rs.500000 against fire insurance.
One day the house is totally gutted in a devastating fire. The insurance surveyors certified
that the building is a total loss with no salvage value and that the insurable value of the
building just prior to the loss was Rs.40000. The insurer will pay to Sunil:
(a) Rs.400000
(b) Rs.250000
(c) Rs.500000
(d) Nil
(In case of partial loss full amount will be given)
This surplus income will be capitalized through discounting at the interest rate of
8% per annum for 25 years term.
160000 pmt, bgn mode , 25 n, 8 i
Comp pv=1844600
57 The most important reason for the perceived increase in the longevity of adult life
expectancy is because of improvements in
(a) Child mortality
(b) Migration of population
(c) Improved mortality of older sections of people
(d) None of these
60 Under the event of the death or serious disabilities of spouse (home maker), the
economic consequences to be covered by financial planning are
(a) Day care for dependent children
(b) Costs to meet domestic chores hitherto attended by spouse
(c) Income substitution, if earning
(d) All of these
62 One of the items stated below, will not generally have an impact in estimating the
incidence and severity of losses and determining the premium for motor car insurance
(a) Make
(b) Age
(c) Colour
(d) Rating zone
63 Vishal made a proposal for insurance cover to protect his holiday home property
which was occupied on and off during the year. One of the following perils may be
excluded from the cover by the insurance company?
(a) Fire
(b) Third party liability
(c) Theft
(d) Loss of rental income
65 (A) Term insurance provides protection on insured lives for a selected period only
(B) Premiums payable under term insurances are low because nothing is payable to
the policyholder at the end of the term, if he survives
66 John 22, is a young executive at the start of his career . He travels extensively by road
in and out of the city. He has to start a family in 5-6 years time.What kind of life
insurance cover should be suitable for him?
(a) Endowment insurance policy
(b) Money back policy
(c) Unit-linked policy
(d) Temporary insurance policy with convertibility and renew ability option
68 One way of protecting the erosion in the value of a term insurance policy is by taking
an
(a) Level benefit constant term insurance
(b) Decreasing benefit term insurance
(c) Increasing benefit term insurance
(d) None of these
69 For repayment of mortgage (housing loan) or meeting hire purchase liabilities, this
type of policy could be the most appropriate?
(a) Decreasing term insurance
(b) Level benefit term insurance
(c) Increasing benefit term insurance
(d) None of the above
72 In a limited payment with profit whole life insurance, while the premium paying
period is limited to a certain number of years, at the time of claim settlement:
(a) Bonuses will be paid for the same period as the premium paying period
(b) Bonuses for the period commencing from the year of cessation of premium to the
claim date will be paid
(c) Bonuses will be paid for the period commencing from the date of risk till the
date of claim.
(d) None of the above
73 The most important component for cash value (surrender value) accumulation in the
early years of the policy term is the
(a) Interest factor
(b) Level premium
(c) Home office exempts
(d) None of these
74 The whole life policy which meets both the needs of providing for assureds
dependents as well as providing for the assureds periodic financial needs is
(a) Convertible whole life plan
(b) Increasing whole life insurance policy
(c) Anticipated whole life plan
(d) Limited payment whole life plan
76 Any payment received from an insurance policy by way of death or maturity claim ,
anticipated settlement payment, bonus etc are exempt from income tax as per the
provisions of
(a) Section 10 of the Income Tax Act, 1961
(b) Section 88 of the Income Tax Act
(c) Section 80 C of IT Act
(d) None of these
77 Sums received from any policy under which more than 20% of the sum assured is
payable as premium will be
(a) Taxable
(b) Tax-exempt
(c) Tax-exempt up to 50%
(d) None of these
78 Under a deferred annuity, the purchaser can pay the purchase premium as
(a) Single premium only
(b) By installments only
(c) In any way as stated in (a) and (b) above
(d) None of the above
83 The maximum benefit per adult male/female per year under the Jan Arogya Bima
Policy is
(a) Rs.7500
(b) Rs.5000
(c) Rs.8000
(d) Rs.4000
84 Under “Unborn Child Disability” policy, the following risks are covered except one:
(a) Congenital defects
(b) Congenital deformity
(c) Malformation
(d) Still Birth
85 (A) The maximum paid up capital of a TPA in equity shares amount to Rs.1 crore
(B) The TPA should have a working capital at all times of not less than Rs.1 crore
88 Under motor vehicle insurance , the following losses are covered. Except for one
(a) Terrorist action
(b) Riot and strike
(c) Burglary housebreaking or theft
(d) Manufacturing defects
89 (A) Insured’s declared value (IDV) is a negotiated arrangement between the insurer
and the insured
(B) In case of total loss, IDV and not the sum assured is payable as the claim amount
90 Under an Overseas Travel insurance policy , the maximum cover for third party
liability is
(a) US $ 40000
(b) US $ 200000
(c) US $ 500000
(d) None of these
95 Calculate the paid up value under a policy with the following particulars.
S A (sum assured) =Rs.25000 Plan and Terms Endowment- 25 years
DOC (date of commencement) 14.06.1989 Mode =quarterly
Last premium paid 14.03.1997.
(a) Rs.8000
(b) Rs.4000
(c) Rs.7500
(d) Rs.8500
Solution:
Policy in force up to : = 14-06-199
Total period premiums paid = (14-06-1997)-(14-06-1989)
= 8 years
No of premiums paid = 32
No of premiums payable = 25*4=40
99 For obtaining an insurance cover under Group Insurance Scheme for a group of
people, The group concerned---------------------
(a) Should be formed immediately before applying for the cover
(b) Should already exist
(c) Should be formed after finalizing terms with the insurer
100 A group insurance scheme that offers insurance cover together with the savings
element is called------------------
(a) Group annuity scheme
(b) Voluntary retirement scheme
(c) GSLI
2. The value of Rupee one receivable 15 years for on today at 5% interest are
(a) 0.48
(b) 0.36
(c) 0.55
(d) 1.00
3.A has lodged a theft claim in a policy in his name for a watch belonging to his uncle for
which he has no insurance. This is in infringement of the principle of:
(a) Insurable Interest
(b) Indemnity
(c) Utmost Good faith
(d) Utmost Good faith & Insurable interest
5.In the above question if contact is for non marine insurance (excluding marine
insurance) insurable interest must be present
(a) At the time of contract.
(b) At the time of occurrence of loss.
(c) Both at (a) and (b) above.
(d) None of the above.
6. What is the amount of claim payable if the loss is Rs.8000/- under a policy with a sum
insured of Rs.1 lakh and ‘excess’ limit is Rs. 4,000/-
(a) Rs.2000/-
(b) Rs.400/-
(c) Nil
(d) Rs.3000/-
8. Under Private Car Package Policy, the insured vehicle shall be treated as a constructive
Total Loss if the cost of repair of the vehicle exceeds---% of the IDV of the vehicle:
(a) 75%
(b) 80%
(c) 90%
(d) 40%
15. Under the Fire Tariff the Buildings are classified as:
(a) Industrial Building & Godown
(b) Class a, b, c,
(c) Kaccha construction & Other constructions
(d) None of the above.
18. Which of the following methods does not fall under Risk Retention
(a) Self-insurance fund
(b) Voluntary deductible
(c) Transfer of Risk of Sub-Contractor
(d) Losses debited to operating expenses
20. Which of the following requires additional premium to be covered under Money
(transit) policy
A) Dishonesty of employees carrying the cash
B) ‘Hold-up’ risk
C) Disbursement risk
21. As per IRDA Regulations, if an insurer on receipt of Survey report requires additional
information on specific issues, he shall make request within ______ days of receipt of the
original report.
(a) 15 days
(b) 3 days
(c) 21 days
(d) 7 days
22. Which of the following is covered on a payment of extra premium under Agriculture
Pump set policy?
(a) Mechanical breakdown
(b) Electrical breakdown
(c) Flood
(d) Terrorism
25. Breach of which of the following conditions in the policy will prevent the insured
from recovering only a particular loss, the policy remaining unaffected.
(a) Condition precedent to liability
(b) Condition subsequent to liability
(c) Condition precedent to contract
(d) Condition subsequent to contract
26. Which of the following claims can not be settled by Branch offices of Public Sector
insurance companies?
(a) Cattle claims
(b) Marine cargo claims
(c) Motor Third Party claims
(d) Fire claims
28. Under Universal Health Scheme the maximum sum insured per person or family does
not exceed Rs._______.
(a) Rs. 20,000
(b) Rs. 4,000
(c) Rs. 30,000
(d) Rs. 15,000
33. No Fault Liability provisions the compensation payable for permanent disablement is
(a) Rs. 25000 under Section 140
(b) Rs. 25000 under Section 141
(c) Rs. 50000 under Section 140
(d) Rs. 50000 under Section 141
39. The limit of filing of an appeal against the order of the District Consumer Court:
(a) 6 months
(b) 3 months
(c) 1 months
(d) 1 year
47. In case of fire and miscellaneous insurance the insurable interest must be present
(a) At the time of taking the policy
(b) At the time of loss
(c) Both of above
(d) None of above
(a) Only B
(b) Both A & B
(c) Neither A nor B
(d) Only A
53. If an insurance policy is ‘not’ stamped as per the Indian Stamp Act, the contract
becomes_____________.
(a) Unenforceable
(b) Void
(c) Voidable
(d) Illegal
59. Where risk period exceeds nine months, what %age of annual premium will be
charged under motor policies?
(a) 50%
(b) 75%
(c) 85%
(d) 40%
61. The minimum premium under a Fire Policy for offices/ shops is
(a) Rs.500
(b) Rs. 250
(c) Rs. 40
(d) Rs. 50
64. Which of the following statements is true under the Consumer Protection Act?
Statement A: An appeal to the national commission against the order of the State
commission has to be filed through an advocate
Statement B: The decision of the national commission is final with no further appeal
65. According to Fire Tariff, which of the following cannot be covered under value
polices ?
(a) Obsolete machinery
(b) Brand new machinery
(c) Curios
(d) Works of art
67. _____ is not an example of Standing charges insured under consequential loss (fire)
policy.
(a ) Purchase cost of raw materials
(b) Salaries to permanent staff
(c) Office & general establishment expenses
(d) Insurance premium
69. Under the Transit Clause (Warehouse to Warehouse) of Institute Cargo Clauses, the
insurance terminates on the expiry of __________ days after discharge from the vessel at
the final port of discharge.
(a) 30
(b) 60
(c) 7
(d) 15
70. Which of the following documents is common to claims processing under marine
import policies and inland transit (Rail/Road) Policies?
(a) Invoice
(b) Bill of Lading
(c) Copy of protest
(d) Lost overboard certificate
72. Which of the following statements is false in relation to marine cargo insurance?
Statement A: The entire marine cargo insurance is governed by Tariff or market
agreements
Statement B: Special storage insurance is granted in conjunction with inland transit open
policy
75. What is the maximum limit of cover for Third Party Property Damage under liability
only polices in case of private cars
(a) Rs 1 lac
(b) Rs. 2 lacs
(c) Rs. 5 lacs
(d) Rs. 7.5 lacs
76. Which of the following is taken as sum insured under a motor policy?
(a.) Fair value of subject matter of insurance
(b.) Agreed value of property insured
(b.) The amount paid when there is a total loss
(d.) Insured’s Declared Value
77. The liability of the owner of the motor vehicle to pay compensation for death claims,
on no fault basis under the Motor Vehicles Act, 1988 is ______________.
(a) Rs 4,000
(b) Rs. 25,000
(c) Rs. 50,000
(d) Unlimited
79. Application for compensation under Solatium scheme has to be made to _____
(a) Corporate office of an Insurance company
(b) Claims enquiry officer nominated by State Government
(c) Nominated divisional office of the insurance company
(d) Claims settlement commissioner nominated by the State Government
81. Under the Motor Vehicles Act 1988, third party claims can be adjudicated upon by
____ set up by the State Government
(a) Legal Aid Board of the State Government
(b) Motor Accidents Claims Tribunal
(c) Lok Adalat
(d) Lok Nyayalaya
83. Which of the following contingencies is not covered under personal accident policy?
(a) Permanent total disablement
(b) Temporary total disablement
(c) Permanent partial disablement
(d) Temporary partial disablement
84. Under group personal accident policies, ‘on duty’ cover is available at ____ % of the
normal premium
(a) 60
(b) 75
(c) 25
(d) 50
85. Which of the following statements is true in relation to Standard Personal Accident
Policy?
Statement A: The cover is for 24 hours
Statement B: The cover is on a world-wide basis
87. Which of the following statements is true as per conditions of personal accident
policy?
Statement A: Short period premium refund is made if the policy is cancelled by the
insured
Statement B: Short period refund is made subject to being no claim made under the
policy
89. The Mediclaim policy is available up to a maximum sum insured of Rs.__ lakh.
(a) 5
(b) 2
(c) 3
(d) 4
90. The insurance under Overseas Mediclaim Policy does not operate beyond______
days of continuous absence from India
a. 120
b. 180
c. 60
d. 90
92. Which of the following expenses are ‘not’ payable under Maternity benefit?
(a) Cesarean
(b) Abdominal operation for extra uterine pregnancy
(c) Miscarriages due to accident
(d) Pre-natal expenses prior to hospitalization
93. Subject to no claim, cost of health check-up is payable under Mediclaim policy once
in every _____ years.
(a) 5
(b) 4
(c) 3
(d) 2
98. In case of Non-Marine losses insured can exercise/opt for ------ as per policy in case
amount offered by insurer is not acceptable to insured..
(a) Arbitration
(b) Litigation
(c) Grievance Redressal Committee
(d) Ombudsman
99. Which Surveyor’s services are mandatory under section 64UM of Insurance Act 1938
where loss is 25000/-?
(a) Independent Surveyor
(b) In-House surveyor
(c) Both
(d) None of the above
100. Select the correct option in respect of pecuniary jurisdiction of the National
Commission under the Consumer Protection Act 1986.
(a) Above Rs. 20 lakhs and up to Rs. 40 lakhs
(b) Above Rs. 20 lakhs and up to Rs. 50 lakhs
(c) Above Rs. 40 lakhs
(d) Above Rs. 20 lakhs and up to Rs. 40 lakhs
1In life insurance, insurable interest must exist at the time of …….
(a) Premium payment
(b) Claim
(c) Proposal
(d) Surrender
2 What is a proposal ?
(a) A request for an insurance cover
(b) An offer to enter into a contract
(c) Both statements are correct
(d) Both statements are wrong
6 With the sale of a life insurance policy, the prospect becomes ……..
(a) Nominee
(b) Policyholder
(c) Proposer
(d) Claimant
27 Policy document is …
(a) Evidence of the contract
(b) Evidence of risk
(c) Evidence of the company having accepted premiums
(d) None of the above
30 If a person having a policy of 4 lacs is suffering from brain hemorrhage and high BP,
the insurer will pay
(a) Basic SA
(b) 50% of SA
(c) EPDB
(d) Nothing
54 What is a proposal?
(a) A request for insurance cover.
(b) An offer to enter into a contract.
(c) Both the request and an offer to enter an insurance contract.
(d) None of the above.
60 A policy in which payment to the annuitant begins after one year and is payable there
after annually is called ….. Annuity.
(a) Quarterly
(b) Immediate
(c) Deferred
(d) Monthly
81 An insurance agent holds a license to act as an insurance agent for a life insurer and a
general insurer is ………..
(a) Agent
(b) Special agent
(c) Corporate agent
(d) Composite agent
82 Stating all essential facts and anticipating all possible doubts is ………..
(a) Incompleteness
(b) Haphazardness
(c) Shadiness
(d) Completeness
88 A new insurer in the fifth year of operations should bring in the following percentage
of business from the rural sector:
(a) 7
(b) 12
(c) 15
(d) 16
96 For a chartered accountant composite agent, the training time for renewal is …….
Hours.
(a) 25
(b) 35
(c) 37
(d) 50
102…………….. Information means information which, if not disclosed, can nullify the
policy.
(a) Fraudulent
(b) Material
(c) Important
(d) Uncommon
104 Insurance agent is licensed under Sec ………… of the Insurance Act.
(a) 39
(b) 40
(c) 41
(d) 42
112 If a life insured had died a few days before the date on which survival benefit was
due, to whom this benefit to be paid?
(a) Nominee
(b) Surviving heirs
(c) Policy holder’s bank account
(d) To none
125 In which of these early death claims will the insurer be more careful
(a) Revival with simple declaration of good health
(b) Revival by simply paying arrears of premium within 6 months of lapse
(c) Revival within maturity date only 4 years from date of death
(d) New policy under non medical scheme
126 Bonus which is attached to the policy and is payable along with the basic SA is
called
(a) Tontine
(b) Cash
(c) Deferred
(d) Reversionary
132 The principle of Utmost Good Faith will operate in existing policy
(a) If the insured person changes his job
(b) If the policy has lapsed and it has to be revived
(c) Every time the premium is paid
(d) f the insured person falls sick and is admitted to the hospital
144 Insurers should bring the following lives in the 4th year of their operations
(a) 5000
(b) 4000
(c) 15000
(d) 20000
147 Which of the following aspects are common to three non-forfeiture options?
(a) They seek to protect the policyholder's interest
(b) Extent of insurance cover on death
(c) The extent of debt on the policy
(d) The amount payable on maturity
149 A person can be given any amount of insurance subject to his capacity ……………..
(a) To pay
(b) To earn
(c) To spend
(d) To save
152 U /S 40A of Insurance Act maximum F Y commission which a new insurer can pay
is ……………
(a) 30%
(b) 25%
(c) 35%
(d) 40%
153 Life insurance policy grants Extended Permanent Disability Benefit (EPDB) if
caused by ……..
(a) Accident
(b) Sickness
(c) Attempted suicide
(d) None of these
158 The responsibility to comply with the principle of utmost good faith rests with
(a) The agent
(b) The proposer
(c) The life to be insured
(d) All the three
159 If the life to be insured falls sick, that fact has to be informed to the insurer
(a) If it happens before the policy is issued.
(b) If it happens before the First Premium Receipt is issued.
(c) If it happens within two years of commencement.
(d) Only if there is a specific query from the insurer.
166 U / S 113 of Insurance Act, a life insurance policy acquires guaranteed surrender
value after ……..of the policy.
(a) 3 years
(b) 1 year
(c) 2 years
(d) 5 years
172 Under the Consumer Protection Act, a claim for Rs. 2,00,000 can be referred to
(a) District Forum
(b) State Forum
(c) Supreme Court
(d) National Commission
180Arrangements made in order that the activities are carried out smoothly are called
(a) Business
(b) Organization
(c) Company
(d) None of these
188 A policy which has been assigned absolutely, will revert to the assignor
(a) When the assignee dies.
(b) When the policy becomes a claim.
(c) Whenever the assignor likes it to happen.
(d) When the assignee reassigns the policy.
189 Life insurance policy can cover Disability arising from ……….
(a) Accident
(b) Sickness
(c) Congenital
(d) None of the above
193 An insurance agent, who holds a license to act as an insurance agent for a life insurer
and a general insurer is ……….. Agent
(a) Combined
(b) Composite
(c) Absorbed
(d) Joint
199 The person for whose benefit Trust is created under the MWP Act is ……….
(a) Nominee
(b) Trustee
(c) Beneficiary
(d) None of these
207 A new insurer in his third year of operation should bring in the following percent of
policies from rural sector.
(a) 15
(b) 12
(c) 7
(d) 4
212 If the monthly premium was due on 24th February 1996 (Tuesday)
(a) The grace period will end on 4th March( Wednesday).
(b) The grace period will end on 25th March( Thursday).
(c) The grace period will end on 9th March (Tuesday).
(d) The grace period will end on 11th March( Thursday).
214 The limits of the authority of an agent are laid down by ………
(a) IRDA
(b) Insurance Act
(c) The Insurer
(d) None of the above.
215 If a life insured has died a few days before date of maturity, but after signing
discharge form, to whom should the claim be paid?
(a) Nominee
(b) Surviving heirs
(c) The policyholder's bank account
(d) Any of the three above.
227 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent advises his prospect to mention cause of death of his brother as accident
instead of suicide.
(b) Agent advises his client that he should mention loss in his weight during last one year.
(c) Both approaches
(d) Neither approach
228 State which of the following statements is correct, with reference to kiosks
(a) A kiosk is connected to the insurer's office.
(b) A kiosk can be used to pay premiums.
(c) Both the statements above are correct.
(d) Both the statements above are wrong.
234 In what ways does Group Insurance differ from Salary Savings Scheme?
(a) Number of persons insured under a policy.
(b) Responsibility of employer
(c) Issue of premium receipts.
(d) In all the above respects.
236……………….. Means the person who makes the decision to accept the proposal.
(a) Director
(b) Accountant
(c) Underwriter
(d) Actuary
257 A policy which has run for 5 years can be called in question if there is …………….
(a) Misrepresentation
(b) Fraud
(c) Mistake
(d) All of the above
272 State which of the following statements is correct with regard to joint life policies.
(a) The premium is the total of the premiums for insuring the two persons separately.
(b) The premium will be less than the cost for insuring the two persons separately.
(c) Both the statements above are correct.
(d) Both the statements above are wrong.
277 In what ways does Group Insurance differ from Salary Savings Scheme?
(a) Ownership of the policy
(b) Mode of payment of premium
(c) Parties to the contract
(d) In all the above respects
280 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent helps the clients for settlement of claims on policies not sold by him.
(b) Agent offers to help his clients for the claim settlement, provided they place family
insurance with him.
(c) Both approaches
(d) Neither approach
284 If death takes place within the days of grace, claim is …………….
(a) Paid in full subject to recovery of unpaid premiums.
(b) Paid for 50 %
(c) Paid in full.
(d) Not paid
289 In which respect does non-life insurance differ from life insurance?
(a) Object of insurance (one insures human beings, the other does not).
(b) One is based on indemnity, the other is not.
(c) Length of contract (one issues long term, the other does not).
(d) Nature of cover (one covers sickness, the other does not).
292 Which of the following segments are potentially good for life insurance?
(a) Working women
(b) Aged persons
(c) Young children
(d) All the above.
293 A new insurer in his first year of operation should bring following percent of policies
from rural sector ……..
(a) 4
(b) 7
(c) 12
(d) 5
294 The IRDA has powers U / S 47A of Insurance Act to decide on disputes relating to
claims not exceeding ………………
(a) Rs. 4,000
(b) Rs. 5000
(c) Rs. 2000
(d) Rs, 3000
297 How does Automatic Advance of Premium differ from Extended Term Assurance?
(a) In the amount of SA payable on death.
(b) Likelihood of terminating without any cash payment to the policyholder.
(c) In the duration for which the policy will remain in force.
(d) In the case of reviving the policy on original terms.
300 In what ways does Group Insurance differ from Salary Savings Scheme?
(a) The person who pays the premium.
(b) Responsibility to pay the premium.
(c) Decision to take the policy.
(d) In all the above three respects.
313 A license for insurance agency will not be given unless the person
(a) Has passed examination prescribed by the IRDA.
(b) Is 21 years of age.
(c) Has undergone training.
(d) Satisfies all the above conditions.
317 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent collects FP in cash and substitutes his own cheque and pays in the insurer's
office.
(b) Agent collects premium of big cheque and deposits in the office after one week.
(c) Both approaches
(d) Neither approach
318 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent declares that he can get a clean policy for any person.
(b) Agent tells his prospect that he will ensure that no extra premium will be charged for
his overweight.
(c) Both approaches
(d) Neither approach
319 In which of the cases listed below will the help of the agent be most useful?
(a) Death claims.
(b) Maturity claims.
(c) Survival benefits
(d) Annuity cases.
325 The probability of 50% for an event happening means that the event
(a) Will happen 50% of the time over a very large number of trials.
(b) Will happen regularly every alternate occasion.
(c) Happening will become closer to 50 % as the attempts increase.
(d) Will never exceed 50 % however large be the attempts made.
333 Which of the approaches of the agent is / are right? Which is the good approach?
(a) In a policy without accident benefit, agent advises his prospect not to mention
previous accident.
(b) Agent advised his prospect to mention his earlier sick leave even though it was
taken on false grounds.
(c) Both approaches
(d) Neither approach
335 If age proof submitted along with proposal is later found to be false, the insurer
(a) May declare the policy null and void ab initio.
(b) May revise the premium on the basis of actual age from the commencement.
(c) May revise the premium and other terms of the contract.
(d) May do any one of the three suggested above.
338 Which of the following statements is true with regard to Children's policies?
(a) The policy vests at age 18 last birthday.
(b) The policy vests at age 18 next birthday.
(c) The policy vests at age 18 nearest birthday.
(d) All the statements above are correct.
339 Which of the following are confidential and will not be given to the proposer?
(a) The medical report.
(b) The agent's confidential report.
(c) Both the medical report and the agent's report.
(d) Neither of the above.
340 Which of the approaches of the agent is / are right? Which is the good approach?
(a) An agent distributes company's leaflets to his clients, adding there in that he was
the company's best agent.
(b) On his personal card, agent states that he is a representative of the best life insurance
company.
(c) Both approaches
(d) Neither approach
343 A new Insurer in his fourth year of operation should bring in the following percent of
policies from rural sector.
(a) 4
(b) 15
(c) 14
(d) 12
346 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent advertised in local news paper that he had qualified for MDRT membership.
(b) Agent sends birthday greetings to his clients.
(c) Both approaches
(d) Neither approach
348 A fixed date on which benefits may become payable either absolutely or
contingently, is called ………………
(a) Maturity.
(b) Due date.
(c) Vesting date.
(d) None of these.
349 Premium which takes into account the three elements of mortality, interest and
expenses is …………. Premium.
(a) Office
(b) Tabular
(c) Risk
(d) Net
350 The route by which the product reaches the consumer is …………….
(a) Distribution channel
(b) Market bypass
(c) Trade line
(d) Selling arena
353 Ombudsman has to pass an award within ……….. Month (s) of the receipt of the
complaint.
(a) One
(b) Two
(c) Three
(d) Four
359 Which of the approaches of the agent is / are right? Which is the good approach?
(a) Agent advises his client to mention his parents' ages at death as 60 each, even though
they had died earlier than age 40.
(b) Agent advises his client to mention death of one of his family members by suicide.
(c) Both approaches
(d) Neither approach
368 When interest rates fall, the premiums charged by an insurer are likely to
(a) Increase
(b) Decrease
(c) Neither increase nor decrease
(d) Remain the same.
370 Single policy issued as evidence of a group insurance contract is called ………..
(a) Group
(b) Overall
(c) Master
(d) Unit
373 The premium charged by a life insurance company is on the basis of ………….
(a) Mortality
(b) Interest
(c) Expenses
(d) All these
375 For a young person who has just started his career, the suitable plan may be ………
(a) Money Back
(b) Convertible whole life policy
(c) Endowment policy
(d) Term Assurance
377 The competition for the life insurance agent comes from those who canvass for
(a) Small savings
(b) Mutual funds
(c) House property
(d) All the three above
387 Which of the following factors help to avoid adverse selection in group policies
(a) No option to choose quantum of insurance cover
(b) Minimum number to be included in the cover
(c) Similarity in the nature of the jobs
(d) All the three above
390 If the LA has died a few days after the date on which SB was due, to whom this SB
should be paid?
(a) Nominee
(b) Surviving heir
(c) Policyholder's bank account
(d) Any of the above
395 It is wrong to terminate an existing policy and take out a fresh one if
(a) It is done with a view to collect higher first year commission
(b) The earlier policy was taken without fully understanding the implications of the
MWPA Act
(c) The agent who had recommended the earlier policy is not active any more
(d) The benefit under the new policy are drastically different from the existing one.
396 Which of the following statements is correct if the insurer started operations on 1 6
2000
(a) It must insure at least 5000 lives in the year 2000-2001 from social sector
(b) It must insure at least 3750 lives in the year 2000-2001 from social sector
(c) It must insure at leat2500 lives in the year 2000-2001 from social sector
(d) All the above statements are wrong
398 Which of the following factors are relevant to compare two avenues for saving
(a) Withdrawal facilities
(b) Govt recognition of the fund
(c) The qualifications of the agent
(d) None of the above
403 The principle of UGF does not apply if the fact relates to
(a) Provision of law
(b) Height or weight in the personal statement submitted to the doctor
(c) Relationship to the nominee
(d) Any of the above
404 If a claim is made in Jan 2003 under a policy which commenced in May 1998 stating
that the LA had died in June 1999
(a) Sec 45 of the Act will not apply
(b) The claim can be treated as an early claim
(c) Foul play must be suspected
(d) All the three statements above are correct
405 If asked by a policyholder to help a friend's insurance problem, the agent should
(a) Find out what has happened to the earlier agent before agreeing
(b) Agree to do so straight away
(c) Refuse on the ground that it is not proper to handle another agent's policy
(d) None of the above
406 When an agent visits a policyholder after the policy is sold, he communicates that
(a) He is looking for more business
(b) He wants to help if the policyholder has any problem
(c) He has nothing better to do at that time
(d) Any of the above
430 State which of the following statements is correct in connection with a kiosk.
(a) It is managed by advertising agencies.
(b) Information is given manually.
(c) Both the statements above are correct.
(d) Both the statements above are wrong.
437 An insurance agent can act at one time for …. Life insurer/s.
(a) 1
(b) 2
(c) 3
(d) any number of
438 Which one of the following should not be done during an interview?
(a) Record the conversation on a tape recorder.
(b) Allow the prospect time to think about the proposal.
(c) Enquire about the prospect's financial situation.
(d) Contradict the correctness of the prospect's ideas.
444 A policy which has been assigned, will revert back to the assignor
(a) When the purpose for which it was assigned is not valid any more.
(b) When the policy becomes a claim.
(c) When the nominee under the policy dies.
(d) When the policy is assigned back by the assignee.
448 Who amongst the following can take out a group insurance policy?
(a) Office goers who travel in the same compartment in the suburban train.
(b) A group of travelers on a package tour.
(c) A contractor who engages the same people every day on daily wages.
(d) Members of a toddy tappers association.
453 In the case of Life Insurance, the principle of insurable interest operates:
(a) In the same way as in fire insurance.
(b) In the same way as in marine insurance.
(c) In the same way as in motor insurance.
(d) Differently than in other forms of insurance.
454 Which one of the following is correct with reference to Life Insurance?
(a) The claim can be paid only after verification of the income of the deceased person.
(b) The claim amount should not exceed the loss of income to the family.
(c) The claim amount should be determined by a surveyor.
(d) None of the above is true.
494 An objection is
(a) A blessing in disguise
(b) A flimsy excuse
(c) A means to get rid of the agent
(d) All of the above
510 Which one of the following is correct with reference to the Kiosk?
(a) This is useful only to people who do not have computer and internet knowledge
(b) Technical knowledge is necessary to operate the kiosk
(c) Both are correct
(d) Both are wrong
514 A license of insurance agency will not be given unless the person
(a) Is recommended by an insurer
(b) Is a graduate
(c) Is a resident of town where the insurer has an office
(d) Satisfies all the above conditions
535 State which of these persons will not be given license to work as an insurance agent.
(a) A person with criminal record
(b) The executive of corporate
(c) An employee of insurance company
(d) All of the above.
551 The premium printed on the schedule of the policy is worked out from
(a) Net premium
(b) Risk premium
(c) Office premium
(d) None of the above
552 The principle of utmost good faith is meant to protect the interest of
(a) The insurer
(b) The community of policy holders
(c) The share holders
(d) None of the above
557 Which of the following segments are potentially good for annuities
(a) Women with earned income
(b) Persons over 45 years of age
(c) Young children
(d) All of the above
574 In the event of the death of the policy holder, which one is correct?
(a) The claim amount, when paid belongs to the nominee
(b) The claim amount, when paid belongs to the heirs of the insured
(c) Both statements are correct
(d) Both statements are wrong
576 Which in the following 4 statements is true with regards to children's policies
(a) The deferred date is a policy anniversary
(b) The vesting date is a policy anniversary
(c) Both statements are correct
(d) Both statements are wrong
581 Which of the following help to get the attention of the prospect?
(a) Using pictorials and graphs
(b) Using computer based colourful presentations
(c) Taking the prospect right down the relevant figures and facts
(d) All of the above
591 The insurance company will refuse to pay the claim if it is found that
(a) The damage was caused by the striking employees deliberately
(b) The damage was caused by a burglar deliberately
(c) He damage was caused by the owner deliberately
(d) None of the above situations.
605 If a policyholder applies for cancellation of his policy soon after he receives the FPR
(a) Full premium will be refunded
(b) Policy will be treated as lapsed from the nest premium due date
(c) He will be debarred from taking any further insurance policy
(d) Full premium after small deductions will be refundable
2 Calculate age nearer birthday, age last birthday & age next birthday based on following
data: DOP is12th Sep 2003 and DOB is 8th March 1972.
(a) Age nearer birthday is 32, age next birthday is 32, age last birthday 31
(b) Age nearer birthday is 33, age next birthday is 33, age last birthday 32
(c) Age nearer birthday is 31, age next birthday is 31, age last birthday 30
(d) None of the above
3Calculate ages nearer, next and last birthday if DOP is 4th March 2003 and DOB is 3rd
March 1948.
(a) 55, 56, 55
(b) 56, 57, 55
(c) 54, 55, 53
(d) None of the above
4 Calculate ages nearer, next and last birthday if DOP is 15th Feb 2003 and DOB is 8th
April 1942.
(a) 61, 61, 60
(b) 62, 62, 61
(c) 60, 60, 59
(d) None of the above
5 Calculate age nearer, next and last birthday if DOP is 6th Sep 2003 and DOB is 8th
June 1971.
(a) 32, 33, 32
(b) 33, 34, 33
(c) 31, 32, 31
(d) None of the above
6 Calculate age nearer, next and last birthday if DOP is 23rd Sep 2003 and DOB is 8th
Oct 1969.
(a) 34, 34, 33
(b) 35, 36, 35
(c) 33, 34, 33
(d) None of the above
8 Calculate age nearer , next and last birthday if the DOP is 13th March 2002 and DOB is
8th July 1944.
(a) 58, 58, 57
(b) 59, 59, 58
(c) 57, 57, 56
(d) None of the above
9 Calculate age nearer , next and last birthday if the DOP is 4th May 2003 and DOB is
8th Oct 1952.
(a) 51, 51, 50
(b) 52, 53, 52
(c) 50, 51, 50
(d) None of the above
10 Calculate age nearer , next and last birthday if the DOP is 13th March 2003 and DOB
is 8th July 1945.
(a) 58, 58, 57
(b) 59, 59, 58
(c) 57, 57, 56
(d) None of the above
11 Calculate ages nearer, next and last birthday if DOP is 27th Aug 2003 and DOB is 8th
March 1970
(a) 33, 34, 33
(b) 34, 35, 34
(c) 32, 33, 32
(d) None of the above
12 Calculate ages nearer, next and last birthday if DOP is 4th March 2003 and DOB is
8th Dec 1948.
(a) 54, 55, 54
(b) 55, 57, 56
(c) 3, 55, 54
(d) None of the above.
14 Calculate age nearer, next and last birthday if DOP is 23rd Sep 2005 and DOB is 8th
Oct 1969.
(a) 36, 36, 35
(b) 35, 36, 35
(c) 35, 35, 36
(d) None of the above
22 Calculate premium under SSS if DOB is 28 6 1974, SA is 40,000/-, Term is 35, DOM
is 24 12 2037, SA Rebate for SA 50,000/- and above is 1.50. TP is 27.46 for age 27, 27.83
for age 28 and 28.37 for age 29.
(a) Rs.87.77
(b) Rs.89.57
(c) Rs.97.41
(d) None of the above
24 Calculate Paid up value with the help of the following data: SA is 4,000/-; Plan &
Term is Endowment for 20 years; DOC is 1st January 1995; LUP is 1st January 1998 and
Mode of payment is Quarterly.
(a) Rs.3000
(b) Rs.1500
(c) Rs.2500
(d) Nil
26 Calculate PV if SA is 1,00,000/-, Term is 25, LUP is 1st February 2002, DOC is 1st
August 1998 and Mode of payment is Half-yearly.
(a) 12,000/-
(b) 14,000/-
(c) 16,000/-
(d) 18,000/-
29 Calculate PV if SA is 20,000/-, Term is 25 years, LUP is 1st October 1999, DOC is 1st
October 1990 and Mode of payment is Yearly
(a) 7,200/-
(b) 6,400/-
(c) 8,000/-
(d) 8,800/-
30 Calculate PV if SA is 1,50,000/-, Term is 25 years, DOC is 1st Sep 1992, LUP is 1st
March 1995 and Mode is HLY.
(a) 21,000/-
(b) 18,000/-
(c) 24,000/-
(d) Nil
32 Calculate PV if SA is 200,000/-, Term is 25 years, DOC is 1st Jan 1998, LUP is 1st
Oct 2001 and Mode is QLY.
(a) 32,000/-
(b) 30,000/-
(c) 28,000/-
(d) Nil
33 Calculate PV if SA is 20,000/-, P & T are Endowment for 20 years, DOC is 1st May
1997, LUP is 1st November 2002 and Mode is Half yearly.
(a) 6,500/-
(b) 5,500/-
(c) 6,000/-
(d) 5,000/-
34 Calculate PV if SA is 23,000/-, End Term is 15 years, LUP is 1st March 1982, DOC is
1st March 1973 and Mode is Qly. Also assume that bonus addition is @ 75/- per thousand
per annum.
(a) 30,858
(b) 28,325
(c) 29,325
(d) 22,192
38 Calculate PV if SA is 32,000/-, Term is 16 years, LUP is 1st April 2002, DOC is 1st
April 1994 and Mode is QLY.
(a) 17,600/-
(b) 16,000/-
(c) 14,400/-
(d) 12,800/-
39 Calculate PV if SA is 40,000/-, Term is 12 years, DOC is 1st March 1998, LUP is 1st
March 2002 and Mode of payment of premium is HLY.
(a) 15,500/-
(b) 16,666/-
(c) 13,333/-
(d) 15,000/-
40 Calculate PV if SA is 35,000/-, Term is 25 years, DOC is 1st April 1975, LUP is 1st
April 1988 and Mode is HLY.
(a) 18,200/-
(b) 16,800/-
(c) 19,600/-
(d) 35,000/-
42 Calculate PV if SA is 50,000/-, Term is 25 years, DOC is 1st Sep 1992, LUP is 1st
March 1995 and Mode is HLY.
(a) 7,000/-
(b) 6,000/-
(c) 8,000/-
(d) Nil
44 Calculate PV if SA is 50,000/-, Term is 25 years, DOC is 1st Jan 1998, LUP is 1st Oct
2001 and Mode is QLY.
(a) 8,000/-
(b) 7,500/-
(c) 7,000/-
(d) Nil
45 Find out SV if DOS is 5 - 4 - 2003, Plan & Term is Endowment for 31 years, SA is
40,000/-, due date of the LPP (H) is 25 - 9 - 2001, DOC is 25 - 9 - 1986, VB after
valuation as on 31 - 3 - 2001 is 34,000/- and SV factors for various durations are 22% for
(a) 11,000
(b) 13,500
(c) 16,200
(d) 9,250
47 Calculate SV if DOS is 5 - 4 - 2003, Plan & Tern are Endowment for 31 years, Sa is
40,000/-, LPP (H) is 25 - 9 - 2001, DOC is 25 - 9 - 1986, VB is Nil and SV factors for
various durations are 22% for 14 years, 25% for 15 years and 30% for 16 years
(a) 4,400/-
(b) 6,000/-
(c) 5,000/-
(d) 5,500/-
50 Calculate Loan Value if Plan & Term are Endowment for 31 years, SA is 40,000/-,
DOC is 25 - 9 - 1986, Mode is HLY, IP due in September 2001 has been paid, VB as on
31 - 3 - 2001 is 34,000/-, SV factors for various durations are 22% for 14 years, 25% for
1
(a) 13,500/-
(b) 16,006/-
(c) 13,339/-
(d) 14,580/-
51 Find out the claim amount to be paid if DOD is 18 - 2 - 2002, DOC is 20 - 7 - 1989,
LUP (Q) is 20 - 1 - 2002, IP is 320/-, SA is 40,000/-, VB is 30,000/- and IB is 70 per
thousand as per Valuation as o 31 - 3 - 2001.
(a) Rs.50,000
(b) Rs.69,360
(c) Rs.72,160
(d) Rs.52,800
52 Find out the claim amount payable if DOD is 18 - 8 - 2002, DOC is 20 - 8 - 1989,
LPP (Q) is 20 - 8 - 2002 paid on 6 - 8 - 2002, IP is 320/-, SA is 50,000/-, VB is 36,000/-,
IB as per valuation as on 31 - 3 - 2001 is 68/- per thousand.
(a) 89,720/-
(b) 89,400/-
(c) 86,000/-
(d) 86,320/-
53 Find out the claim amount payable if DOD is 18 - 2 - 2003, DOC is 20 - 5 - 1989,
LPP (Q) is 20 - 2 - 2003 paid on 6 - 2 - 2003, IP is 300/-, SA is 50,000/-, VB is 36,000/-
and IB as per Valuation as on 31 - 3 - 2002 is 68/- per thousand.
(a) 89,700/-
(b) 86,300/-
(c) 86,000/-
(d) 89,400/-
55 Calculate Claim Value if DOD is 18 8 2002, DOC is 20 5 1989, LPP (Q) is 20 8 2002
(paid on 6 8 2002), IP is 320/-, SA ia 50,000/- and VB is 36,000/- and IB is 68/- per
thousand as per valuation as on 31 03 2001.
(a) Rs. 85,360/-
(b) Rs. 88,760/-
(c) Rs. 86,320/-
(d) Rs. 89,720/-
56 Find out the claim amount payable if DOD is 18 - 2 - 2003, DOC is 20 - 5 - 1989,
LPP (Q) is 20 - 2 - 2003 paid on 6 - 2 - 2003, IP is 300/-, SA is 50,000/-, VB is 36,000/-
and IB as per Valuation as on 31 - 3 - 2002 is 68/- per thousand.
(a) 89,700/-
(b) 86,300/-
(c) 86,000/-
(d) 89,400/-
Under the HLV approach the effort is to estimate the future earnings of an individual and
capitalize them with an appropriate discounting factor (a reasonable rate of interest )
keeping in view the present inflation and bank rate. This present value of the total future
earnings is thus the total economic surplus available to the dependent family (as an
economic unit). The surplus amount, however, does not include the individual's
These expenses need to be deducted from the surplus to determine the net economic gain
in terms of HLV meant for the family. The effort is to protect this estimated future
economic value being contributed to the family through a life insurance policy.
Formula for HLV
H = (E-M) x an
where H = Human Life Value
E = Earnings per annum
M = SELF (Maintenance charges + taxes+ Life Insurance Premium)
an= Annuity factor at a given rate of discount &
n = the working span (Retirement age - Present age)
Example
Jain’s present age is 40 years and wishes to retire at age 60. Present salary is Rs 3,50,000
per annum. Total Life Insurance premiums paid Rs 30,000 p.a. (including children's and
wife's policy). Income Tax amounts to Rs 45,000. Medical expenses are being reimbursed
by the company and self maintenance expenses Rs 36,000 (including entertainment, club
membership, sports)
Now this income needs to be capitalized through discounting at an appropriate rate ( say
8% p.a.) for the next 20 years is Rs 25,34,260/-
From a financial calculator perspective 239,000 is the payment 20 is n (No. of years for the
payment) 8 is the % (discount factor) You need to calculate for PV (the present value)
The assumption in the calculation is that the present income will continue to remain the same (an
adjustment for inflation and for seen sickness, partial disability or unemployment for a short
term). The above HLV is only a representative economic value of the individual for his family
2ndStep
Is to determine all resources that would be available to the family from available
resources
3rdStep
Subtract 2 from 1 and the result is the amount of funds needed to provide for the family
Solution:
1st step:
The expenses are Rs 3,00,000 (including 1 lac of Mr. Pagnis personal expenses)
Resources required by family to maintain the standard of living is Rs 2 lacs (to be
required for the next 35 years)
Rs 2 lacs capitalized through discounting factor of 3% per annum for the next 35 years -
the capitalized value arrived at is:
2,00,000 X 22.1318* = Rs 44,26,360 ( BGN )
(*discounting factor applicable for applied interest rate of 3%)
2nd step:
Resources available to the family - Rs 20 lacs from current investments
3rd step
Subtracting 2 from 1 we have (Rs 44,26,360 - Rs 20,00,000) = Rs 24,26,360 To this
amount we add the final costs of Rs 1 Lacs
Mr. Pagnis income post tax is Rs 3.5 lacs. Adjusted for dependent's need only the amount
required is Rs 2 lacs.
To arrive at the capital needed to produce that amount would be Rs 2 lacs divided by .03
which is Rs 66,66,667. To this you add the final costs of Rs 1,00,000
a) Self-insurance
b) Insurance
c) Avoidance
d) Transfer
3. Frank has an indemnity policy in respect of his house. The house was valued when he
first took out the policy three years ago at 80,000 and insured for that amount. The policy
has been renewed each year since, without alteration. If the house is destroyed by fire and
the cost of re-building it would be 110,000, how much is Frank likely to recover?
a) 58,182
b) 80,000
c) 88,000
d) 110,000
4. A client explains that she only wants a life insurance policy that will cover her family
against financial risk over the next five years, while she still has dependent children and a
large mortgage. It is unlikely her income will increase over this period. What type of
insurance is she looking for?
6. During retirement, a person would maintain a high level of life insurance protection to:
8. Steven has a premium due on a motor insurance policy. He calls the agent and requests
for an extension. The agent assures him that the insurer usually gives a grace period of
one week for such payment. Steven has an accident. The insurer cannot deny liability for
the loss on the grounds that the premium was not paid because of the doctrine of:
a) Waiver
b) Estoppel
c) Agency
d) Utmost good faith
a) Any profit distributed to holders of life policies who cash in those policies
b) Generally profit that will be distributed on the same terms as the sum assured
c) A distribution of income to shareholders
d) Profit distributed to holders of unit-linked policies
10. Professional indemnity insurance protects a financial advisor who has been negligent
in giving investment advice:
Ques1. The money insurance policy is designed to cover the Riot & Strike
(a) Loss of money in transit in the hands of insured's employee bill collectors.
(b) Loss during payment of wages.
(c) Loss due to “hold up” risks
(a) Floating
(b) Collective
(c) Individual
(d) Group
Ques3. Under which of the following extensions is 'not' provided for Workmen's
Compensation Tariff?
Ques4 which of the following contingencies is 'not' covered under personal accidental
policy?
Ques6. Which of the following documents is not relevant to bodily injury claims for
processing third party claims under motor policies?
(a) Age
(b) Job
(c) History of previous surgery
(d) Sex
Ques9. Under group personal accident policies, 'on duty' cover is available at ___% of the
normal premium.
(a) 60
(b) 75
(c) 25
(d) 50
Ques10. Which of the following is correct meaning of sum assured under majority of
policies?
Ques11. The insurance under Overseas Medical policy does not operate beyond ____
days of continuous absence from India
(a) 120
(b) 180
(c) 60
(d) 90
Ques12. Under the personal Accident Policy, weekly benefits are paid subject to a
maximum period of ______ weeks.
(a) 100
(b) 104
(c) 52
(d) 75
Ques15. Out of 400 houses, each valued at Rs.20,000/-, 4 houses get burnt (on an
average) every year. What should be the contribution of each owner to pay for the losses
of 4 houses?
(a) Rs.800
(b) Rs.200
(c) Rs.400
(d) Rs.600
Ques16 Calculate the total premium payable under the Collective fidelity Guarantee
Policy for. A Cashier-Rs. 1 lakh-Rate 0.75% and an accountant -Rs.2 lakh- Rate 1.00%
(a) Rs.2,750
(b) Rs.3,000
(c) Rs.1,700
(d) Rs.2,500
(a) Rs.2,000
(b) Rs.10,000
(c) Rs. 18,000
(d) Nil
Ques19. The Standard Fire and Special perils Policy covers works of art for an amount
'not' exceeding Rs._________________
(a) 20,000
(b) 10,000
(c) 5,000
(d) 15,000
Ques20.What is the amount of claim payable if loss is Rs15,000 in case of a policy with
sum assured Rs. 1 lakh and excess clause Rs.10,000?
(a) 2,000
(b) 5,000
(c) 3,000
(d) 4,000
Ques21. Calculate the extra premium payable on expiry of the policy in case Money in
transit Policy, if estimated amount as per proposal is 10 lakh, actual amount as per
declaration is 12 lakh and rate of premium is Re. 1 per mille.
(a) Rs.200
(b) Rs.1000
(c) Rs.1200
(d) Rs.500
Ques22 Out of 1000 pedal cycles, each valued at Rs.2000, 5 are stolen on an average
every year. The rate of premium for each pedal cycle in % may be indicated.
(a) 5
(b) 10
(c) 50
(d) 0.5
Ques25 Which of the following cover is suitable for regular export/import shipments?
Ques26. According to Fire Tariff, which of the following cannot be covered under valued
policy?
Ques27 Which of the following risks is not covered under Bankers Blanket policies?
Ques29 Calculate the refund payable on expiry of the policy in case Money in Transit
Policy, if estimated amount as per proposal is 20 lakh, actual amount as per declaration is
12 lakh and rate of premium is Re. 1 per mille.
(a) Rs.800
(b) Rs.1000
(c) Rs.1200
(d) Rs.500
Q13 Hint: Per mille means per thousand. Provisional premium= 1cr x 1/1000= 10000
Refund of premium= 10000- (60 lac x 1/ 1000)= 4000