Insurance MCQ Questions and Solutions with Explanations

41

What are the factors in determining premium in a life policy?

A) Policy reserves B) Mortality C) Expenses D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

Policy reserves, Mortality and Expenses are the factors in determining premium in a life policy.

42

Surplus is defined as

A) Excess value of assets over liabilities B) When turnover of the insurer is high C) Excess value of liabilities over assets D) Excess of liabilities

Discuss

Answer & Solution

Answer: Option A

Solution:

Surplus is defined as Excess value of assets over liabilities. A surplus is the amount of an asset or resource that exceeds the portion that is utilized. A surplus is used to describe many excess assets including income, profits, capital, and goods.

43

Identify the correct statement

A) Bonus is not allowed on surrender of a policy B) In compound reversionary bonus it is a percentage of basic benefit and already attached bonus C) Terminal bonus and compound bonus are one and the same D) Persistence bonus is allowed by the insurer at its discretion in certain cases

Discuss

Answer & Solution

Answer: Option B

Solution:

In compound reversionary bonus it is a percentage of basic benefit and already attached bonus. Compound reversionary bonuses are a percentage rate, which apply to the sum assured in respect of the basic policy benefit, and to the reversionary bonuses already attached to the policy. The difference is in the way the bonuses are accrued.

44

State which is correct out of the following

A) Horoscope like a certificate of baptism is a standard age proof B) Horoscope like certified extract from a family bible as to the date of birth is a standard age proof C) Horoscope like a marriage certificate issued by a Roman catholic church is a standard age proof D) Horoscope is a non-standard proof of age for life insurance purposes

Discuss

Answer & Solution

Answer: Option D

Solution:

Horoscope is a non-standard proof of age for life insurance purposes. Non- standard age proof like Horoscope, Service Record where age is not verified at the time of entry, E.S.I.S. Card, Marriage Certificate in case of Muslim Proposer, Elder's Declaration, Self-declaration and Certificate by Village Panchayats are accepted subject to certain rules.

45

What is the incorrect statement out of the following ones?

A) Agent’s report is not always compulsory B) Agent’s report should contain details of proposer’s health, habits, occupation, income, and family C) An agent is a primary underwriter from the insurer’s point of view D) Prospectus is a legal document

Discuss

Answer & Solution

Answer: Option A

Solution:

Agent’s report is always compulsory in insurance.

46

State the incorrect statement

A) In the event of loss of policy document, no fresh proposal needed B) The insurer will in such an event issue a duplicate policy without making any change in the contract C) No fresh underwriting is involved for issue of a duplicate policy D) The assured has to approach a competent court of law and obtain an order directing the insurer to issue a duplicate policy

Discuss

Answer & Solution

Answer: Option D

Solution:

The assured does not have to approach a competent court of law and obtain an order directing the insurer to issue a duplicate policy.

47

State the incorrect of the following.

A) Amount of premium need not be shown; only sum assured is to be shown B) There is no provision for name of the nominee in the policy C) Mode of payment of claim is also shown in the policy D) Date of birth of the assured has to be shown in the policy

Discuss

Answer & Solution

Answer: Option C

Solution:

Mode of payment of claim is not shown in the policy.

48

Out of the following what is the specific provision in a policy?

A) First Pregnancy clause B) General provisions C) Policy schedule D) Standard provisions

Discuss

Answer & Solution

Answer: Option A

Solution:

First Pregnancy clause is the specific provision in a policy.

49

What is correct

A) Loan is a privilege available only in some policies B) If interest on loan is not paid, it becomes part of the loan C) Nomination can be made by the proposer in the proposal itself D) All of the above

Discuss

Answer & Solution

Answer: Option D

Solution:

All the statements are correct.
Loan is a privilege available only in some policies, If interest on loan is not paid, it becomes part of the loan and nomination can be made by the proposer in the proposal itself.

50

Pick out the correct statement.

A) Extension of premium paying period is normally allowed as an alteration in a policy B) Increase in sum assured will be welcomed as a preferred alteration in a policy C) Splitting of a policy into two or more is allowed as an alteration D) Notice is not always necessary in an assignment to be given by the assured to the insurer

Discuss

Answer & Solution

Answer: Option C

Solution:

Splitting of a policy into two or more is allowed as an alteration. There are many alterations in insurance policies that can be noted on the certificates. Any variation to the text of a life insurance policy, including a correction, is known to insurance professionals as `Alteration'. A policy evidences a life insurance contract between the insured and the insurer.

Insurance MCQ Questions and Solutions with Explanations | Commerce