Insurance MCQ Questions and Solutions with Explanations | Commerce

An alteration of the risk occurs when there is a change in the circumstances which, according to the contract, are to form the basis of the insurance, and the risk is thereby altered contrary to the implied conditions of the contract.

ROP plan offers premium refund at maturity if the policyholder survives the tenure.

The grace period for renewal beyond expiry date of a health insurance policy is 30 days. The policy will lapse if the premium is not paid within the grace period.

Policy Allocation Charge would be high in the initial years.
This is deducted from the premium upfront. It is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge is levied to recover the initial expense incurred towards issuing the policy such as the distributor fee and the cost of underwriting. The balance is the investable amount used to purchase units of the funds chosen by the policyholder. Though the Insurance and Regulatory and Development Authority, or IRDA, has set guidelines that ensure a cap on these charges from the fifth year onwards, the premium allocation charges in the first few years continue to remain significantly high.

Goodwill is the established reputation of a business and regarded as a quantifiable asset. It is calculated as a part of its value when it is sold.

The set time limit for completing a claim investigation is 6 months.

The main advantage of a policy loan over other loans is that there is no credit check; the interest rate is usually much lower; the policyholder can pay back the loan according to virtually any repayment schedule; and, in fact, the policyholder is not even legally obligated to pay back the loan.

An agent is the person that arranges for a customer to get the necessary insurance. An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Description: Generally, there are two types of such agents who reach the prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents.

A rider is a provision of an insurance policy that is purchased separately from the basic policy and that provides additional benefits at additional costs. So, term insurance cannot be taken as a rider.

Earned surplus is the sum of a company's profits, after dividend payments, since the company's inception. A portion of the surplus would be left for distribution to shareholders.