** Do not take more than 1 Minute for each MCQ.
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SET 4 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE
1. Risks are the likelihood of loss or damage resulting from the occurrences of :
a) Hazards
b) Perils
c) Accidents
d) Both a and b
e) Both a & c
2. risks are more predictable and risks are considered as the most insurable
risks :
a) Static and Pure
b) Dynamic and Static
c) Fundamental and Important
d) Pure and Dynamic
e) Catastrophic and Financial
3. Statement 1 : Catastrophic risks are big enough to cause bankruptcy of the owner or even theinsurer
of assets.
Statement 2 : Fundamental risks are those that affect a lot of people together.
In the light of above two statements, choose among the examples of these two risks in the correct
sequence :
a) Fire & Theft in a house
b) Nuclear War & Train Accident
c) Flood & Bike accident of Sunil
d) Train accident & Job loss of Sunil
e) Bankruptcy of Sunil & Earthquake
4. The actual loss includes the cost of :
A) Repair
B) Replacement or Reinstatement
C) The Consequential losses
D) Only A & B
E) All of the above
5. The first and foremost step of Risk Management process is:
A) To insure risk
B) To control risk
C) To prevent risk
D) To reduce risk
E) None of the above
6. Listed below are some of the reasons for financial risks. Mark the odd one out :
A) Fluctuations in the stock market
B) Exchange rate fluctuations
C) Political disturbances
D) Mental agony and loss of reputation
E) Inefficient capital structure of a business
7. Risk Management as a subject of study evolved formally as a function of :
A) Business enterprise
B) Debt collectors
C) Financial lending
D) Investment organisation
8. Match the following unexpected situations associated with the types of Risks / Assets :
a) Loss of income due to untimely death 1. Business Risk
b) Legal liability due to third party injury on road 2. Ship
c) Damage to machinery and theft of factory stock 3. Health Risk
d) Loss of income due to illness 4. Car
e) Cancellation of export order due to delays 5. Job Risk
9. When was the Oriental Life Insurance Company established ?a)
1818
b) 1834
c) 1907
d) 1938
e) 1829
10. Full name of IRDAI and where its office is situated ?
A) Insurance Rules & Development Authority of India; Chennai
B) Insurance Regulatory & Development Authority of India; Hyderabad
C) Insurance Regulation & Development Authority of India; Bangalore
D) Insurance Regulatory & Developmental Authority (India); Mumbai
11. In insurance, Risk is measured in terms of and Premiums are worked out on the
basis of .
a) Factors; Risk
b) Ratings; Percentage
c) Percentage, Probabilities
d) Ratings; Investments
e) Probabilities; Sum Assured
12. Life insurance is related with the protection and compensation of which assets :
A) Personal Property
B) Human lives
C) Pension funds
D) A & B
E) B & C
13. Which of the following categories of insurance falls under General insurance :
A) Fire
B) Marine
C) Miscellaneous
D) Both A & B
E) A, B & C
14. When was the Export Credit Guarantee Corporation of India established ?
A) 1938
B) 1957
C) 1973
D) 1971
E) 1975
15. If an individual thinks to reduce the risk, he should put the plans and strategies, the
occurrence of an incident.
A) after
B) before
C) at
D) during
E) on
16. An insurer can do business in two categories on the basis of only one Licence in case of :
A) Life insurance
B) Health insurance
C) Micro insurance
D) General insurance
E) Miscellaneous insurance
17. Reinsurance can be exercised by an insurance company in :
A) Full
B) Part
C) Both Full & Part
D) Excess
E) Surplus
18. As per the Insurance Act, what is the maximum limit placed on insurance companies with regardto their
investments in any one particular company ?
A) 20%
B) 40%
C) 15%
D) 25%
E) 30%
19. Which among the following are owned by Govt. Of India and are established by Acts of
Parliaments ?
A) Life Insurance Corporation of India.
B) General Insurance Corporation (GIC) of India.
C) National Insurance Co. Ltd.
D) Only A & B
E) All of the above
20. The agents get earnings in the form of and these are regulated by .
A) Salary ; Insurance Companies
B) Salary ; Development Officers
C) Commission ; Insurance Companies
D) Bonus ; IRDA
E) Commission ; IRDA
21. The latest changes in regulations for insurance brokers was done by IRDA in the year :
A) 2013
B) 2015
C) 2018
D) 2016
22. The primary role of any medical examiner is to examine and certify the
and the insurability of the .
A) Age ; Insured
B) Height ; Insured
C) Health ; Proposer
D) Weight ; Insured
E) Waist ; Proposer
23. The Insurance Ombudsman was created by the :
A) L.I.C
B) G.I.C
C) IRDA Act, 1999
D) Insurance Act, 1938
E) Govt. of India
24. Which is the famous institute in India offering specialized and short duration courses for the
employees of the insurance companies ?
A) National Insurance Academy, Pune
B) Insurance Institute of India, Mumbai
C) College of Insurance, Mumbai
D) Institute of Actuaries of India, Kolkata
E) Institute of Insurance & Risk Management, Hyderabad
25. Some insurers in India have created niches in their particular segments and the prime example isthe
insurance sector.
A) Health
B) Motor
C) Personal Accident
D) Marine
E) Travel
26. Selling of packaged products and simplified common underwriting practices are the
characteristics of which insurance segment ?
A) Individual
B) Retail -- SME
C) Corporate
D) Retail -- Individual
27. The mindset of a life insurance customer is generally reluctant and doubtful at the time of :
A) Purchasing the policy
B) Maturity of policy
C) Death Claim
D) Emergency withdrawal
E) Renewal
28. Choose the Odd one out :
A) Recommend a suitable need based policy to the client
B) Fully explain the products benefits as well as exclusions
C) Recommend an adequate sum assured
D) Selling a regular payment policy as a single payment
E) Recommend a suitable method of premium payment
29. The subject matter of an insurance contract is the :
A) Risk
B) Sum Assured
C) Insured
D) Policy wording
30. Identify the options which can be treated as a Valid contract :
A) Suresh buys a property from a friend at a low price
B) Suresh enters into a contract in a state of unsound mind
C) Suresh provides false information to involve Rakesh to enter into a contract
D) Suresh bribes an official to get into a contract
31. In case of disputes, who has the burden to prove the insurable interest, in life insurance :
A) Insurance Company
B) Proposer
C) Insured
D) Claimant
32. Identify the ways of indemnity in general insurance claims :
A) Repair
B) Replacement
C) Reinstatement
D) Cash Payment
E) All of the above
33. Agreed value policies are issued in insurance of :
A) Artwork
B) Paintings
C) Antiques
D) Vintage cars
E) All of the above
34. The principles of subrogation and contribution does not applies to :
A) Life insurance
B) Personal Accident insurance
C) Only A
D) Only B
E) Both A and B
35. Indisputability clause is applicable to only insurance policies & comes under Section
?
A) Health ; 43
B) Motor ; 45
C) Life ; 45
D) Marine ; 54
E) Life ; 41
36. Insurance contract is cancelled due to :
A) Not fulfilling the policy conditions
B) By not paying premiums
C) After end of term
D) All of the above
37. The insurance plans that provide only death cover are called :
A) Death plans
B) Term plans
C) Endowment plans
D) Whole life plans
E) Risk plans
38. What is the Mode of premium payment, in general, in the regular plans :
A) Monthly
B) Quarterly
C) Half Yearly
D) Yearly
E) All of the above
39. ULIP Plans are a combination of insurance plans and .
A) Investments
B) Mutual Funds
C) Equity Funds
D) Share market
E) Dividend plans
40. The process of transfer of investment from one fund into another is called :
A) Shifting
B) Redirection
C) Switching
D) Altering
E) None of the above
41. The specific time after which the annuity payments start is called the :
A) Investment period
B) Return period
C) Benefit period
D) Annuity period
E) Deferment period
42. Which of the following is not a major category of non life insurance products as per the InsuranceAct
1938 ?
A) Fire
B) Marine
C) Motor
D) Miscellaneous
43. Which of the following insurance provides cover for goods in transit by sea, air, rail, road or bypost ?
A) Marine Cargo
B) Marine Hull
C) Transit policy
D) Transport policy
E) Cargo insurance
44. The rules and regulations of which of the Acts affects Motor insurance in India :
A) Insurance Act, 1938
B) Motor Vehicles Act, 1988
C) Central Motor Vehicles Rules, 1989
D) All of the above
45. Group policies are issued to those groups which have a common objective other than insurance.
A) True
B) False
46. The process of starting a lapsed policy again by payment of due premiums is called .
A) Retrieval
B) Activation
C) Revival
D) Restoration
47. If there is a claim in the policy which is on a higher side than the specified limit, then a loading ischarged
on the renewal premium. Such loading is called .
A) Copayment
B) Excess
C) Franchise
D) Malus
48. are any amendments to the standard conditions of the policy in the form of
modifications or additions and are written separately and / or attached with the policy document.
A) Exclusions
B) Warranties
C) Endorsements
D) Conditions
49. The amount set aside by the insurer’s out of the premium to meet out liabilities of expected futureclaims
are called :
A) Earned Premium Reserves
B) Incurred But Not Reported Reserves
C) Statutory Reserves
D) Unearned Premium Reserves
E) Solvency Reserves
50. The rate of deaths due to illness are known as :
A) Morbidity
B) Trauma rate
C) Mortality
D) Actuarial rate
