Insurance MCQ Questions and Solutions with Explanations

21

Which is not an appropriate reason for a proper financial planning?

A) Break-up of joint family system B) Changing lifestyle C) Underwriting D) Change in behavioral pattern

Discuss

Answer & Solution

Answer: Option C

Solution:

Underwriting is not a reason for proper financial planning. Underwriting services are provided by some large financial institutions, such as banks, or insurance or investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee.

22

When is the right time to start financial planning?

A) Young age B) Middle age C) Advanced age D) First salary

Discuss

Answer & Solution

Answer: Option D

Solution:

First salary is the right time to start financial planning. Financial planning is the process of developing a personal roadmap for your financial well being.

23

Which facility is given to the policyholder to neutralise the bargaining power in adhesion contracts?

A) Surrender B) Loan C) Assignment D) Free look period

Discuss

Answer & Solution

Answer: Option D

Solution:

A free look period is a period where a new insurance policy owner is able to terminate the contract without penalties such as surrender charges.

24

Which of the following defines a proposal form?

A) IRDA Act, 1999 B) IRDA (Licensing of Agents) Regulations, 2000 C) Insurance Act, 1938 D) IRDA (Protection of Policyholders' Interests) Regulations, 2002

Discuss

Answer & Solution

Answer: Option D

Solution:

IRDA (Protection of Policyholders' Interests) Regulations, 2002 defines a proposal form.

25

What are the two distinct phases of a deferred annuity?

A) Waiting and Starting phases B) Loading and Unloading phases C) Accumulation and Payout phases D) Commutation and Continuation phases

Discuss

Answer & Solution

Answer: Option C

Solution:

Accumulation and Payout phases are the two distinct phases of a deferred annuity. A deferred payment annuity is an insurance product that provides future payments to the buyer rather than an immediate stream of income.

26

Who bears the investment risk in a fixed benefit annuity?

A) Insurer B) Insured C) State D) Risk pool

Discuss

Answer & Solution

Answer: Option A

Solution:

Insurer bears the investment risk in a fixed benefit annuity. The annuitant bears the investment risk in a variable annuity, whereas the insurer bears the investment risk in a fixed annuity.

27

Which of the following statements is true?

A) Life insurance policies are contracts of indemnity, while general insurance policies are contracts of assurance B) Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity C) In case of general insurance, the risk event protected against is certain D) The certainty of risk event in case of general insurance increases with time

Discuss

Answer & Solution

Answer: Option B

Solution:

Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity.

28

Which of the following statements is incorrect?

A) Ombudsman is appointed by the Central Government 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 complaint

Discuss

Answer & Solution

Answer: Option B

Solution:

The recommendations of the Ombudsman are not binding on the insured. Hence, option (2) is the incorrect statement.

29

State the correct option.

A) In a policy document, it is now compulsory to indicate the address of the local Ombudsman B) Address of the insured is optional in the policy document C) The address of the IRDA is also necessarily shown in the policy document D) Either the local Ombudsman's address or that of the IRDA needs to be shown in the policy

Discuss

Answer & Solution

Answer: Option A

Solution:

In a policy document, it is now compulsory to indicate the address of the local Ombudsman.

30

Before the composite licence could be renewed, the applicant needs to undergo renewal training of _________ from an approved institution.

A) 25 hours B) 50 hours C) 35 hours D) 75 hours

Discuss

Answer & Solution

Answer: Option C

Solution:

Before the composite licence could be renewed, the applicant needs to undergo renewal training of 35 hours from an approved institution.

Insurance MCQ Questions and Solutions with Explanations | Commerce