Insurance MCQ Questions and Solutions with Explanations

31

What of the following statement is correct regarding insurance?

A) Life Insurance contract is between a proposer and his agent for protection of his life’s economic worth B) Prospectus is in lieu of policy in certain cases C) Prospectus is an introductory document giving details of features and benefits of life insurance products to a proposer D) There is no difference between a proposal and prospectus

Discuss

Answer & Solution

Answer: Option C

Solution:

Prospectus is an introductory document giving details of features and benefits of life insurance products to a proposer. When a company seeks to raise capital through the offer of securities to the public, or seeks an admission to trading of securities, a prospectus or listing particulars will be issued detailing in-depth financial information about the company and its future objectives and strategies.

32

Identify the correct statement out of the following.

A) Free look period enables the policyholder to return the policy and ask for refund subject to certain conditions B) Passport & School certificate is a standard proof of age C) Ration card is a non-standard proof of age D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

All the statements are correct.
Free look period enables the policyholder to return the policy and ask for refund subject to certain conditions, Passport & School certificate is a standard proof of age and Ration card is a non-standard proof of age.

33

Pick out the incorrect statement.

A) In a medical examiner’s report physical features like height, weight, blood pressure, etc need to be stated for proper risk assessment B) If a proposal cannot be considered as a non-medical case for underwriting, a medical report is essential C) There is no such thing as non-medical underwriting D) Ration card is a non-standard proof of age

Discuss

Answer & Solution

Answer: Option C

Solution:

Non Medical Life Insurance is for those who want the quickest possible coverage without going through a longer underwriting process. This product is a fully underwritten product which allows for rapid decision on available medical criteria.

34

Rights and privileges in a policy will be found in

A) Standard provisions in a policy document B) Policy schedule C) Preamble to the policy D) Clauses in the policy document

Discuss

Answer & Solution

Answer: Option A

Solution:

Rights and privileges in a policy will be found in Standard provisions in a policy document. The policy document is the most important document associated with insurance. It is evidence of the contract between the assured and the insurance company. It is not the contract itself.

35

State the correct statement out of the following ones.

A) Nominee is in every circumstance the owner of the policy proceeds B) Nomination is entitled to give a valid discharge to an insurer for payment of claim C) Assignment and nomination are one and the same D) Even if a policy is assigned to the insurer for a loan it cancels the existing nomination made earlier

Discuss

Answer & Solution

Answer: Option B

Solution:

Nomination is entitled to give a valid discharge to an insurer for payment of claim. The nominee is statutorily recognized as a payee who can give a valid discharge to the Corporation for the payment of policy monies.

36

What is correct

A) Insurer in certain circumstances may waive subsequent premiums B) Policy document and FPR are one and the same C) RPRs are revival premium receipt D) After issue of FPR subsequent premiums are to be paid by the assured

Discuss

Answer & Solution

Answer: Option D

Solution:

After the issue of the FPR, the insurance company will issue subsequent premium receipts when it receives further premiums from the proposer. These receipts are known as renewal premium receipts (RPR). The RPRs act as proof of payment in the event of any disputes related to premium payment.

37

What is correct?

A) A minor cannot be named as a nominee in a policy B) Where nominee is a minor, an appointee has to be appointed by the assured C) There can only be one nominee and not more D) If more than one nominee is appointed the policy claim moneys can be shared amongst them

Discuss

Answer & Solution

Answer: Option B

Solution:

Where nominee is a minor, an appointee has to be appointed by the assured. If the nominees are minors, then you need to name an appointee as well. The appointee, who must be an adult, will be paid the sum assured if you die while your nominees are still minors. You will need to instruct the appointee directly or through a will to take care of the money for your intended nominees.

38

Pick out the incorrect sentence.

A) Underwriting is risk assessment in a proposal on the life of the proposer for offering him life cover B) Prevention of selection against the insurer is the purpose of underwriting C) Underwriting is a needless exercise in today’s environment of inadequate coverage of population for life insurance D) Underwriting process defines and determines the premium chargeable on the proposal for covering risk

Discuss

Answer & Solution

Answer: Option C

Solution:

Underwriting is a needed exercise in today’s environment of inadequate coverage of population for life insurance.

39

Indicate the correct sentence

A) In complex cases the underwriter may adopt judgment method, rather than numerical method only B) Decision as to acceptability of risk is that of the underwriter C) Postponement of risk is also a kind of underwriting decision D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

All the statements are correct.
In complex cases the underwriter may adopt judgment method, rather than numerical method only, Decision as to acceptability of risk is that of the underwriter and Postponement of risk is also a kind of underwriting decision.

40

State the correct sentence

A) A minor is not eligible for insurance B) Proposal on the life of a minor can be submitted by his parent or guardian after the need for insurance is established C) A minor has no insurable interest in his life and therefore, is ineligible for insurance D) Proposal on a minor life can be submitted by anyone

Discuss

Answer & Solution

Answer: Option B

Solution:

Proposal on the life of a minor can be submitted by his parent or guardian after the need for insurance is established.

Insurance MCQ Questions and Solutions with Explanations | Commerce