Insurance MCQ Questions and Solutions with Explanations | Commerce

The essential feature of an MRI is to act as a collateral for ensuring financial protection for home loan borrowers.

Rebate is an allowed deduction in large sums assured and low frequency mode of payment. Typically most companies offer rebates for higher SA (higher than a certain amount). This is because the cost of servicing of all policies of the same type being almost the same, a higher SA means lower servicing cost per unit of SA. Consequently, this translates to higher profits/returns per unit of SA or per unit of premium paid for the company.

A policy is said to be withdrawn on surrender of the policy in return for surrender value. In case of life insurance, if you surrender a policy before the completion of its full term, you could get back a portion of the money you paid as premium, after deducting charges. This money is surrender value.

In periodical valuation of assets and liabilities book value of assets is normally taken by the insurer.

All the above statements are correct.
Moral Hazard is about the intention and post purchase behaviour of an assured in most cases, Proposal is the basis of contract between a person seeking insurance cover and the insurer and Insurers should view very seriously the conduct of the persons for life insurance cover whenever they seek profit by purchase of insurance.

All the statements are incorrect.
Free look period does not allow the insured to return the policy within 30 days of receipt of the policy bond, If the policy is returned as above, premium is refunded by the insurer and PMLA is applicable to life insurance.

Proposal is not always necessary from proposer’s point of view. It can also be from buyer point of view.

With issue of FPR further premiums are not required to be paid. You do not have to pay any further premium.

All the statements are incorrect.
Code of conduct is compulsory for a successful agent, Ethical standards does not conflict with drive to do good volume of business and Persistency of policies is under the control of agents as well as the insurer.

All the statements are incorrect.
A policy document has to be signed by a competent authority authorised by the company and it need to be stamped as per Indian Stamp act, Stamping the document is compulsory but it has to be signed insurer and Policy itself need to be issued by the insurer.