Insurance MCQ Questions and Solutions with Explanations | Commerce

In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay.
An insurance contract commences when the life insurance company issues a first premium receipt (FPR). The FPR is the evidence that the policy contract has begun.
Any instrument mentioned in Schedule I to the Indian Stamp Act is chargeable to duty as prescribed in the schedule. These include affidavit, lease, memorandum and articles of company, bill of exchange, bond, mortgage, conveyance, receipt, debenture, share, insurance policy, partnership deed, proxy, share etc. The Government can reduce or remit whole or part of duties payable. So, all the statements are correct.

Complaints can be lodged against any Insurer both in Public Sector and Private Sector in both Life and Non-Life sectors.

Reversionary bonus is the bonus declared every year as a percentage of (Guaranteed Maturity Benefit/Sum Assured + Earlier Reversionary Bonuses). It is payable on death of the life assured or maturity of the policy.

The agent has to show his licence to his prospect-customer on demand. Rest of the statements are incorrect. Sharing commission with a client is illegal.

All the options are correct, except option 3. Sharing commission with a client is illegal.

Uberrima fides means every party to an insurance contract must disclose all material information.

This principle is an important element within a contract of insurance. It means that the insured must have an interest in the subject matter of the insurance. In a practical sense, this means that the insured must suffer a financial or economic loss. This also means that the interest in the property must be a real one and not a contrived one.
A tenant is a person who occupies land or property rented from a landlord. So, 'insurable interest' does not lie with the person.

This policy is quite risky because your cash value and death benefit can fluctuate according to the performance of your investment portfolio. Therefore, if your underlying investments perform well, then your cash value and death benefit may increase accordingly. If your investments perform worse than you expected, your cash value and death benefit may decrease.

The premium is the consideration from the insured, and the promise to indemnify, is the consideration from the insurers.

An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness.