Insurance MCQ Questions and Solutions with Explanations

11

Which is incorrect?

A) Ombudsman is appointed by the central Govt under powers of the Insurance Act’38 and under Redressal of Public Grievance Rules 1998 B) The recommendations of the Ombudsman are always binding on the insured C) The Ombudsman can act as a mediator by mutual agreement between the insurer and the insured D) If mediated, the decision of the Ombudsman is final whether to accept or reject the compliant

Discuss

Answer & Solution

Answer: Option B

Solution:

The recommendations of the Ombudsman are always binding on the insured. The ombudsman shall pass an award within a period of three months from the receipt of the complaint. The awards are binding upon insurance companies.

12

Which is correct

A) By transferring risks to an insurer one can be careless about one’s assets B) If there is a loss it can lead to payment of money by the insurer C) Potential loss to assets can be ignored D) If assets are insured the owner of such assets can have comfort of peace of mind and look after his business without worries

Discuss

Answer & Solution

Answer: Option D

Solution:

If assets are insured the owner of such assets can have comfort of peace of mind and look after his business without worries.

13

Identify the correct statement

A) Assets are protected by insurance B) Insurance prevents loss to assets C) Insurance compensates for the loss of the value of assets D) Probabilities of loss are considerably reduced by insurance

Discuss

Answer & Solution

Answer: Option C

Solution:

Insurance compensates for the loss of the value of assets. Coverage may also include compensation for being unable to use the item or for other damages caused by the item's loss.

14

Which is correct

A) In insurance subsidy plays a part in fixing premium B) Losses are shared by subsidy C) A few persons have to share the loss of many D) Losses of a few persons are shared by many persons thus reducing the burden of contribution to loss compensation

Discuss

Answer & Solution

Answer: Option D

Solution:

Losses of a few persons are shared by many persons thus reducing the burden of contribution to loss compensation.

15

Which of the following statement is correct?

A) Endowment assurance has no saving element B) Whole Life Plan has no saving element at all C) Term Insurance has little or no saving element D) Money Back plan has no savings element

Discuss

Answer & Solution

Answer: Option C

Solution:

Term Insurance has little or no saving element. In term policies if you stop paying the premium the risk cover ceases and the policy ends. Nothing is payable to you as there is no savings element in the policy.

16

Choose the incorrect sentence out of the following ones.

A) Life Insurance policies are contracts of indemnity B) Life insurance contracts are valued contracts and not contracts of indemnity C) In Non-Life contacts there is no assurance D) There is no certainty of risk occurrence in non-Life contracts

Discuss

Answer & Solution

Answer: Option A

Solution:

A policy of insurance on one's own life is not an indemnity because it is merely a contract to pay a certain sum in the event of death.

17

Which is an advantage in cash value contracts?

A) Reduced returns on account of inflation B) Low accumulation in earlier years C) Lower yields D) Secure and safe investment

Discuss

Answer & Solution

Answer: Option D

Solution:

Secure and safe investment is an advantage in cash value contracts. Cash value life insurance provides more financial flexibility.

18

Define the concept of Uberrima Fides.

A) Not disclosing medical facts and information in the proposal B) Not revealing all material facts known only to the proposer in the proposal C) Paying premium in time and as and when it is due D) Fully disclosing all material facts about the proposed by him in the proposal

Discuss

Answer & Solution

Answer: Option D

Solution:

Uberrima fidesis a Latin phrase meaning utmost good faith literally, most abundant faith. It is the name of a legal doctrine which governs insurance contracts. Fully disclosing all material facts about the proposed by him in the proposal.

19

Which of the two decisions are involved in a savings proposition?

A) Retention of risk and reduced consumption B) Gifting and accumulation C) Spending and accumulation D) Postponement of consumption and parting with liquidity

Discuss

Answer & Solution

Answer: Option D

Solution:

Postponement of consumption and parting with liquidity are involved in a savings proposition.
Postponement of consumption: an allocation of resources between present and future consumption.
Parting with liquidity (or ready purchasing power) in exchange for less liquid assets. For instance, purchase of a life insurance policy implies exchanging money for a contract which is less liquid.

20

Which of the following is a contingency product

A) Shares B) Bonds C) Life insurance D) Bank Deposits

Discuss

Answer & Solution

Answer: Option C

Solution:

Life insurance is a contingency product. Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc.

Insurance MCQ Questions and Solutions with Explanations | Commerce