Ic 38 Question English PDF

IC-38
INSURANCE AGENTS
LIFE
Chapter no. Title Page no.
SECTION 1 COMMON CHAPTERS
1 Introduction to Insurance 1
2 Customer Service 2
3 Grievance Redressal Mechanism 4
4 Regulatory aspects of Insurance Agents 5
5 Legal Principle of an Insurance Contract 7
SECTION 2 LIFE INSURANCE

6 What Life Insurance Involves 9
7 Financial Planning 10
8 Life Insurance Products – I 12
9 Life Insurance Products – II 14
10 Applications of Life Insurance 15
11 Pricing and Valuation in Life Insurance 16
12 Documentation – Proposal Stage 18
13 Documentation – Policy Condition - I 19
14 Documentation - Policy Condition - II 21
15 Underwriting 23
16 Payments Under a Life Insurance Policy 25
SECTION 3 HEALTH INSURANCE

17 Introduction to Health Insurance 28
18 Insurance Documentation 28
19 Health Insurance Products 29
20 Health Insurance Underwriting 31
21 Health Insurance Claims 33
III. Sum of economic benefits that can
SECTION – 1 be achieved by building a long term
relationship with the customer
COMMON CHAPTERS IV. Maximum insurance that can be
attributed to the customer
2. Identify the scenario where a debate on
CHAPTER 1 the need for insurance is not required.
I. Property insurance
INTRODUCTION TO INSURANCE II. Business liability insurance
III. Motor insurance for third party
Insurance is risk transfer through risk pooling. liability
IV. Fire insurance
The origin of commercial insurance business
3. As per the Consumer Protection Act, 1986,
as practiced today is traced to the Lloyd‟s
who cannot be classified as a consumer?
Coffee House in London.
I. Hires goods / services for personal
use
How insurance works Insurance II. A person who buys goods for resale
company purpose
III. Buys goods and services for a
consideration and uses them
IV. Uses the services of another for a
consideration
4. What does not go on to make a healthy
relationship?
I. Attraction II. Trust.
Claim III. Communication IV. Scepticism
House owners Contributing Premium
Settlement 5. Which among the following is not an
element of active listening?
An insurance arrangement involves the
I. Paying good attention
following entities like, Asset, Risk, Peril,
II. Being extremely judgemental
Contract, Insurer and Insured
III. Empathetic listening
IV. Responding appropriately
When persons having similar assets exposed to
similar risks contribute into a common pool of
funds it is known as pooling. Answer II III II I III
Apart from insurance, other risk management

techniques include: Self-Examination Questions
1. Risk transfer through risk pooling is called
Risk avoidance, Risk control, Risk retention, ________.
Risk financing and Risk transfer a. Savings
b. Investments
The thumb rules of insurance are: c. Insurance
d. Risk mitigation
Don‟t risk more than you can afford to lose, 2. The measures to reduce chances of
Consider the likely outcomes of the risk occurrence of risk are known as _____.
carefully and a. Risk retention
Don‟t risk a lot for a little b. Loss prevention
c. Risk transfer
Test Yourself d. Risk avoidance
1. What is meant by customer lifetime value? 3. By transferring risk to insurer, it becomes
I. Sum of costs incurred while servicing possible ___________.
the customer over his lifetime a. To become careless about our assets
II. Rank given to customer based on b. To make money from insurance in the
business generated event of a loss
c. To ignore the potential risks facing
our assets
RNIS COLLEGE OF INSURANCE

d. To enjoy peace of mind and plan Q.No. 1 2 3 4 5 6 7 8 9 10
one‟s business more effectively Ans. C B D B D D B A A B
4. Origins of modern insurance business can

CHAPTER 2
be traced to __________. CUSTOMER SERVICE
a. Bottomry
b. Lloyds The role of customer service and relationships
c. Rhodes is far more critical in the case of insurance
d. Malhotra Committee than in other products.
5. In insurance context „risk retention‟
indicates a situation where _____. Five major indicators of service quality
a. Possibility of loss or damage is not include reliability, assurance, responsiveness,
there empathy and tangibles.
b. Loss producing event has no value
Customer lifetime value may be defined as
c. Property is covered by insurance
the sum of economic benefits that can be
d. One decides to bear the risk and its
derived from building a sound relationship
effects
with a customer over a long period of time.
6. Which of the following statement is true?
a. Insurance protects the asset
The role of an insurance agent in the area of
b. Insurance prevents its loss customer service is absolutely critical.
c. Insurance reduces possibilities of loss
d. Insurance pays when there is loss of IRDA has launched an Integrated Grievance
asset Management System (IGMS) which acts as a
7. Out of 400 houses, each valued at Rs. central repository of insurance grievance data
20,000, on an average 4 houses get burnt and as a tool for monitoring grievance redress
every year resulting in a combined loss of in the industry.
Rs. 80,000. What should be the annual
contribution of each house owner to make The Ombudsman, by mutual agreement of the
good this loss? insured and the insurer can act as a mediator
a. Rs.100/- b.Rs.200/- and counsellor within the terms of reference.
c.. Rs.80/- d.Rs.400/-
8. Which of the following statements is true? Active listening involves paying attention,
a. Insurance is a method of sharing the providing feedback and responding
losses of a „few‟ by „many‟ appropriately.
b. Insurance is a method of transferring
the risk of an individual to another
individual
c. Insurance is a method of sharing the
losses of a „many‟ by a few
d. Insurance is a method of transferring Ethical behaviour involves placing the
the gains of a few to the many customer‟s interest before self.
9. Why do insurers arrange for survey and Test Yourself
inspection of the property before
acceptance of a risk? 1. What is meant by customer lifetime value?
a. To assess the risk for rating purposes I. Sum of costs incurred while servicing
b. To find out how the insured purchased the customer over his lifetime
the property II. Rank given to customer based on
c. To find out whether other insurers business generated
have also inspected the property III. Sum of economic benefits that can
d. To find out whether neighbouring be achieved by building a long term
property also can be insured relationship with the customer
10.Which of the below option best describes IV. Maximum insurance that can be
the process of insurance? attributed to the customer
a. Sharing the losses of many by a few 2. Identify the scenario where a debate on
b. Sharing the losses of few by many the need for insurance is not required.
I. Property insurance
c. One sharing the losses of few
II. Business liability insurance
d. Sharing of losses through subsidy
III. Motor insurance for third party d. Personal accident
liability 4. One of the methods of reducing
IV. Fire insurance insurance cost of an insured is _____
3. As per the Consumer Protection Act, 1986, a. Reinsurance b. Deductible
who cannot be classified as a consumer? c.. Co-insurance d. Rebate
I. Hires goods / services for personal 5. A customer having complaint regarding
use his insurance policy can approach IRDA
II. A person who buys goods for resale through
purpose a. IGMS
III. Buys goods and services for a b. District Consumer Forum
consideration and uses them c. Ombudsman
IV. Uses the services of another for a d. IGMS or District Consumer Forum or
consideration Ombudsman
4. What does not go on to make a healthy 6. Consumer Protection Act deals with:
relationship? a. Complaint against insurance
I. Attraction companies
II. Trust b. Complaint against shopkeepers
III. Communication c. Complaint against brand
IV. Scepticism d. Complaint against insurance
5. Which among the following is not an companies, brand and shopkeepers
element of active listening? 7. ___ has jurisdiction to entertain matters
I. Paying good attention where value of goods or services and the
II. Being extremely judgemental compensation claim is up to 20 lakhs
III. Empathetic listening a. High Court b. District Forum
IV. Responding appropriately c.. State Commission
6. Which among the following is not a b. National Commission
characteristic of ethical behaviour? 8. In customer relationship the first
I. Making adequate disclosures to impression is created:
enable the clients to make an a. By being confident
informed decision b. By being on time
II. Maintaining confidentiality of c. By showing interest
client‟s business and personal d. By being on time, showing interest
information and being confident
III. Placing self-interest ahead of 9. Select the correct statement:
client‟s interests a. Ethical behaviour is impossible
IV. Placing client‟s interest ahead of while selling insurance
self interest b. Ethical behaviour is not necessary
for insurance agents
Answer III III II IV II III c. Ethical behaviour helps in
developing trust between the
agent and the insurer
Self-Examination Questions d. Ethical behaviour is expected from
1. _____________ is not a tangible good. the top management only
a. House 10.Active Listening involves:
b. Insurance a. Paying attention to the speaker
c. Mobile Phone b. Giving an occasional nod and smile
d. A pair of jeans c. Providing feedback
2. _ is not an indicator of service quality. d. Paying attention to the speaker,
a. Cleverness giving an occasional nod and smile
b. Reliability and providing feedback
c. Empathy
d. Responsiveness Q.No. 1 2 3 4 5 6 7 8 9 10
3. In India ____ insurance is mandatory. Ans. B A A B A D B D C D
a. Motor third party liability
b. Fire insurance for houses
c. Travel insurance for domestic
travel
CHAPTER 3
GRIEVANCE REDRESSAL
MECHANISM
IRDAI has launched an Integrated Grievance
Management System (IGMS) which acts as a
central repository of insurance grievance data
and as a tool for monitoring grievance redress
in the industry.
Consumer disputes redressal agencies are

established in each district and state and at
national level.
As far as insurance business is concerned, the

majority of consumer disputes fall in
categories such as delay in settlement of
claims, non-settlement of claims, repudiation
of claims, quantum of loss and policy terms,
conditions etc.
The Ombudsman, by mutual agreement of the

insured and the insurer can act as a mediator
and counsellor within the terms of reference.
If the dispute is not settled by intermediation,

the Ombudsman will pass award to the
insured which he thinks is fair, and is not
more than what is necessary to cover the loss
of the insured
Test Yourself
1. The ______________ has jurisdiction to

entertain complaints, where value of the
goods or services and the compensation
claimed is up to Rs.20 lakhs.
I. District Forum
II. State Commission
III. Zilla Parishad
IV. National Commission
ANSWER – I

Self-Examination Questions b. Within three years of rejection of the
1. Expand the term IGMS. complaint by the insurer
a. Insurance General Management System c. Within one year of rejection of the
b. Indian General Management System complaint by the insurer
c. Integrated Grievance Management d. Within one month of rejection of the
System complaint by the insurer
d. Intelligent Grievance Management 8. Which among the following is not a pre-
System requisite for launching a complaint with
2. Which of the below consumer grievance the Ombudsman?
redressal agencies would handle consumer a. The complaint must be by an
disputes amounting between Rs. 20 lakhs individual on a „Personal Lines‟
and Rs. 100 lakhs? insurance
a. District Forum b. The complaint must be lodged within 1
b. State Commission year of the insurer rejecting the
c. National Commission complaint
d. Zilla Parishad c. Complainant has to approach a
3. Which among the following cannot form consumer forum prior to the
the basis for a valid consumer complaint? Ombudsman
a. Shopkeeper charging a price above the d. The total relief sought must be within
MRP for a product an amount of Rs.20 lakhs.
b. Shopkeeper not advising the customer 9. Are there any fee / charges that need to
on the best product in a category be paid for lodging the complaint with the
c. Allergy warning not provided on a drug Ombudsman?
bottle a. A fee of Rs 100 needs to be paid
d. Faulty products b. No fee or charges need to be paid
4. Which of the below will be the most c. 20% of the relief sought must be paid
appropriate option for a customer to lodge as fee
an insurance policy related complaint? d. 10% of the relief sought must be paid
a. Police as fee
b. Supreme Court 10.Can a complaint be launched against a
c. Insurance Ombudsman private insurer?
d. District Court a. Complaints can be launched against
5. Which of the below statement is correct public insurers only
with regards to the territorial jurisdiction b. Yes, complaint can be launched
of the Insurance Ombudsman? against private insurers
a. Insurance Ombudsman has National c. Complaint can be launched against
jurisdiction private insurers only in the Life Sector
b. Insurance Ombudsman has State d. Complaint can be launched against
jurisdiction private insurers only in the Non-Life
c. Insurance Ombudsman has District Sector
jurisdiction Q.No. 1 2 3 4 5 6 7 8 9 10
d. Insurance Ombudsman operates only Ans. C B B C D A C C B B
within the specified territorial limits
6. How is the complaint to be launched with CHAPTER 4
an insurance ombudsman?
a. The complaint is to be made in writing
REGULATORY ASPECTS OF INSURANCE
b. The complaint is to be made orally AGENTS
over the phone
c. The complaint is to be made orally in a A Life Insurance policy is a promise which an
face to face manner Insurer makes to the client who takes out a
d. The complaint is to be made through policy and the promise is to pay a certain
newspaper advertisement amount as per the policy conditions and its
7. What is the time limit for approaching an status on the happening of an event causing a
Insurance Ombudsman? loss on account of the client’s death before
a. Within two years of rejection of the the maturity of the policy or at the time of
complaint by the insurer survivance of the policy term.

The main purpose of the Regulations is to A. Indicate the scale of commission if
protect the interests of the policyholder. asked by the customer
B. Share the commission by way of
The Insurance Act, 1938 and Insurance rebate
Regulatory and Development Authority Act C. Disclose his licence on demand
1999 form the basic framework of insurance D. Indicate the premium to be charged
regulation. 6. Which of the following is incorrect?
A. An agent is expected to inform the
The insurance Act, 1938 has provisions for
insurer all relevant facts about the
monitoring and controlling operations of the
prospectus.
insurance companies.
B. Advice the prospectus on
Regulation and development of insurance nomination
business is the main objective of the IRDA Act C.Offer rates different than those
1999 and this was achieved in the offered by insurer
establishment of the Authority in 2000. D.Render assistance in claim
settlement
In the aforesaid Act of 1999 as well the
subsequent Act 2000 provisions are there for 7. Which of the following acts is insurance
regulating both the insurance companies and business in India not linked to?.
intermediaries as far as protection of A. ESIC Act, 1948
policyholders’ interests is concerned. B. ECGC Act,
C.LIC Act, 1956
An Agent can either be an individual or D . Income Tax Act, 1961
corporate agent. 8. IRDAI regulations prescribe insurers
obligations. Which of the following
To become an agent he has to meet the isincorrect?
prescribed educational qualifications, undergo A. At point of sale
minimum training and pass the prescribed B . Towards policy servicing
examination on paying the stipulated fees. C. Towards control of expenses
Code of conduct is applicable to every agent D. Customer relationship management
9. Minimum qualification required for
holding a valid licence
insurance agent is pass.
A. Graduate
Self-Examination Questions
B. 10th
1. Which of the following entities is not C. Post-graduate
regulated by IRDAI? D . 7th
A. Insurance comapny 10. may deal with more than one life
B. Insurance Agent insurance company or generalinsurance
C . Bro ker company or both.
D . Employee s of I nsur a ne company A. Agent
2. Insurance agent represents the . B . Surveyor
A. Insurance company C. Composite agent
B. Sub-agent D. None of the above
C . Co-agent Q.No. 1 2 3 4 5 6 7 8 9 10
D . Broker Ans. D A D D B C D D B C
3. The agency appointment letter is given by.
A.Government of India
B. IRDAI
C.General Insurance Corporation
D. Insurer
4. What is not prohibited in the latest
insurance regulations?
A. Rebates
B.Multilevel marketing
C . Sharing of commision
D. Commission
5. Identify the statement which is not
correct. Insurance agent should.
CHAPTER 5 Insurable interest according to common law
LEGAL PRINCIPLES OF AN
INSURANCE CONTRACT
An insurance policy is a contract entered into
between two parties, viz., the company, called the
insurer, and the policy holder, called the insured
and fulfils the requirements enshrined in the Indian
Contract Act, 1872.
Insurance involves a contractual agreement in

which the insurer agrees to provide financial
protection against specified risks for a price
or consideration known as the premium.
Test Yourself
A contract is an agreement between parties, 1. Which among the following is an example of
enforceable at law. coercion?
I. Ramesh signs a contract without
having knowledge of the fine print
II. Ramesh threatens to kill Mahesh if
he does not sign the contract
III. Ramesh uses his professional
standing to get Mahesh to sign a
contract
IV. Ramesh provides false information
to get Mahesh to sign a contract
2. Which among the following options cannot
be insured by Ramesh?
I. Ramesh‟s house
II. Ramesh‟s spouse
III. Ramesh‟s friend
IV. Ramesh‟s parents
Elements of a valid contract include:

Answer II III
1. Which element of a validcontract deals with
premium?
a. Offer and acceptance
b. Consideration
c. Free consent
d. Capacity of parties to contract
2. _____________ relates to inaccurate
statements, which are made without any
fraudulent intention.
a. Misrepresentation
b. Contribution
The special features of insurance contracts c. Offer
include: d. Representation
3. ________________ involves pressure
i. Uberrima fides, applied through criminal means.
ii. Insurable interest, a. Fraud
iii. Proximate cause b. Undue influence
c. Coercion

d. Mistake the hospital and dies because of
4. Which among the following is true regarding pneumonia.
life insurance contracts? a. Pneumonia
a. They are verbal contracts not legally b. Broken back
enforceable c. Falling off a horse
b. They are verbal which are legally d. Surgery
enforceable Q.No. 1 2 3 4 5 6 7 8 9 10
c. They are contracts between two Ans. B A C C C B C C A C
parties (insurer and insured) as per
requirements of Indian Contract Act,
1872
d. They are similar to wager contracts
5. Which of the below is not a valid
consideration for a contract?
a. Money
b. Property
c. Bribe
d. Jewellery
6. Which of the below party is not eligible to
enter into a life insurance contract?
a. Business owner
b. Minor
c. House wife
d. Government employee
7. Which of the below action showcases the
principle of “Uberrima Fides”?
a. Lying about known medical conditions
on an insurance proposal form
b. Not revealing known material facts on
an insurance proposal form
c. Disclosing known material facts on an
insurance proposal form
d. Paying premium on time
8. Which of the below is not correct with
regards to insurable interest?
a. Father taking out insurance policy on
his son
b. Spouses taking out insurance on one
another
c. Friends taking out insurance on one
another
d. Employer taking out insurance on
employees
9. When is it essential for insurable interest
to be present in case of life insurance?
a. At the time of taking out insurance
b. At the time of claim
c. Insurable interest is not required in
case of life insurance
d. Either at time of policy purchase or at
the time of claim
10. Find out the proximate cause for death in
the following scenario?
Ajay falls off a horse and breaks his back.

He lies there in a pool of water and
contracts pneumonia. He is admitted to
SECTION – 2
LIFE INSURANCE
CHAPTER 6
WHAT LIFE INSURANCE INVOLVES
Asset is a kind of property that yields value or
a return. The element of guarantee in a life insurance
contract implies that life insurance is subject
The HLV concept considers human life as a to stringent regulation and strict supervision.
kind of property or asset that earns an
income. It thus measures the value of human
Test Yourself
life based on an individual’s expected net
1. How does diversification reduce risks in
future earnings.
financial markets?
I. Collecting funds from multiple
Example sources and investing them in one
Mr. Rajan earns Rs. 1,20,000 a year and place
spends Rs. 24,000 on himself. II. Investing funds across various asset
The net earnings his family would lose, were classes
he to die prematurely, would be Rs. 96,000 III. Maintaining time difference
per year.
between investments
Suppose the rate of interest is 8% (expressed
IV. Investing in safe assets
as 0.08).
Answer – II
HLV = 96000 / 0.08 = Rs. 12,00,000
1. Which of the below is not an element
of the life insurance business?
a. Asset
b. Risk
c. Principle of mutuality
d. Subsidy
The level premium is a premium fixed such 2. Who devised the concept of HLV?
that it does not increase with age but remains a. Dr. Martin Luther King
constant throughout the contract period. b. Warren Buffet
c. Prof. Hubener
d. George Soros
3. Which of the below mentioned
insurance plans has the least or no
amount of savings element?
a. Term insurance plan
b. Endowment plan
c. Whole life plan
d. Money back plan
4. Which among the following cannot be
termed as an asset?
a. Car
b. Human Life
Mutuality is one of the important ways to
c. Air
reduce risk in financial markets, the other
d. House
being diversification.
5. Which of the below cannot be
categorised under risks?
a. Dying too young

b. Dying too early
c. Natural wear and tear
CHAPTER 7
d. Living with disability FINANCIAL PLANNING
6. Which is correct? 
a. Life insurance policies are Financial planning is a process of:
contracts of indemnity while Identifying one’s life‟s goals,
general insurance policies are Translating these identified goals into
contracts of assurance financial goals and
b. Life insurance policies are Managing one‟s finances in ways that will
contracts of assurance while help one to achieve those goals
general insurance policies are Types of Goals
contracts of indemnity
c. In case of general insurance the
risk event protected against is
certain
d. The certainty of risk event in
case of general insurance
increases with time
7. Which among the following methods is
a traditional method that can help
determine the insurance needed by an
individual?
a. Human Economic Value
b. Life Term Proposition
c. Human Life Value Based on the individual life cycle three types
d. Future Life Value of financial products are needed. These help
8. Which of the below is the most in:
appropriate explanation for the fact
that young people are charged lesser Enabling future transactions,
life insurance premium as compared to Meeting contingencies and
old people? Wealth accumulation
a. Young people are mostly The need for financial planning is further
dependant increased by the changing societal dynamics
b. Old people can afford to pay like disintegration of the joint family,
more multiple investment choices that are available
c. Mortality is related to age today and changing lifestyles etc.
d. Mortality is inversely related to The Economic Life Cycle
age
9. Which of the below is not an
advantage of cash value insurance
contracts?
a. Safe and secure investment
b. Inculcates saving discipline
c. Lower yields
d. Income tax advantages
10. Which of the below is an advantage of
cash value insurance contracts?
a. Returns subject to corroding
effect of inflation The best time to start financial planning is
b. Low accumulation in earlier right after one receives the first salary.
years
c. Lower yields Financial planning advisory services include:
d. Secure investment Cash planning,
Q.No. 1 2 3 4 5 6 7 8 9 10 Investment planning,
Ans. D C A C C B C C C D Insurance planning,
Retirement planning,
Estate planning and
Tax planning
Risk Profile and Investment Style
Risk Profile Investment Style Test Yourself
1. Which among the following would you
recommend in order to seek protection
against unforeseen events?
I. Insurance
II. Transactional products like bank
FD‟s
III. Shares
IV. Debentures
2. When is the best time to start financial
Elements of Financial Planning planning?
I. Post retirement
II. As soon as one gets his first salary
III. After marriage
IV. Only after one gets rich
3. Which among the following is not an
objective of tax planning?
I. Maximum tax benefit
II. Reduced tax burden as a result of
prudent investments
III. Tax evasion
IV. Full advantage of tax breaks
Answer I II III
1. An individual with an aggressive risk
profile is likely to follow wealth
_______ investment style.
a. Consolidation
b. Gifting
c. Accumulation
d. Spending
Investment Parameters
2. Which among the following is a wealth
accumulation product?
a. Bank Loans
b. Shares
c. Term Insurance Policy
d. Savings Bank Account
3. Savings can be considered as a
composite of two decisions. Choose
them from the list below.
a. Risk retention and reduced
consumption
b. Gifting and accumulation
c. Spending and accumulation
d. Postponement of consumption
and parting with liquidity
4. During which stage of life will an
individual appreciate past savings the
most?
a. Post retirement
b. Earner
c. Learner
d. Just married dear ones of the individual in case something
5. What is the relation between unfortunate happens to him.
investment horizon and returns?
a. Both are not related at all Traditional Life Insurance Products
b. Greater the investment horizon
the larger the returns
c. Greater the investment horizon
the smaller the returns
d. Greater the investment horizon
more tax on the returns
6. Which among the following can be
categorised under transactional
products?
a. Bank deposits
b. Life insurance
Accident Death
c. Shares
d. Bonds
Rider (ADB)
7. Which among the following can be Choice of Riders
categorised under contingency Critical Illness
products? Rider (CI)
a. Bank deposits
b. Life insurance
c. Shares
d. Bonds
8. Which of the below can be categorised
under wealth accumulation products?
a. Bank deposits
b. Life insurance
c. General insurance
d. Shares
9. __________ is a rise in the general Waiver of Disability Income
level of prices of goods and services in Premium Rider
an economy over a period of time. Benefit Rider
a. Deflation
b. Inflation
c. Stagflation
Term insurance provides valid cover only
d. Hyperinflation
during a certain time period that has been
10. Which of the below is not a strategy to
specified in the contract.
maximise discretionary income?
a. Debt restructuring
Variants of Term Assurance
b. Loan transfer
c. Investment restructuring
d. Insurance purchase
Q.No. 1 2 3 4 5 6 7 8 9 10
Ans. C B D A B A B D B D
CHAPTER 8
LIFE INSURANCE PRODUCTS –I

Life insurance products offer protection The unique selling proposition (USP) of term
against the loss of economic value of an assurance is its low price, enabling one to buy
individual’s productive abilities, which is relatively large amounts of life insurance on a
available to his dependents or to the self. limited budget.
A life insurance policy, at its core, provides While term assurance policies are examples of
peace of mind and protection to the near and temporary assurance, where protection is
available for a temporary period of time, 4. In decreasing-term insurance, the
whole life insurance is an example of a premiums paid ____________ over time.
permanent life insurance policy. a. Increase
An endowment assurance contract is actually b. Decrease
a combination of two plans - a term assurance c. Remain constant
plan which pays the full sum assured in case d. Are returned
of death of the insured during the term and a 5. Using the conversion option present in a
pure endowment plan which pays this amount term policy you can convert the same to
if the insured survives at the end of the term. __________.
a. Whole life policy
Test Yourself b. Mortgage policy
1. Which among the following is an intangible c. Bank FD
product? d. Decreasing term policy
I. Car 6. What is the primary purpose of a life
II. House insurance product?
III. Life insurance a. Tax rebates
IV. Soap b. Safe investment avenue
2. The premium paid for whole life insurance c. Protection against the loss of
is _____________ than the premium paid for economic value of an individual‟s
term assurance. productive abilities
I. Higher d. Wealth accumulation
II. Lower 7. Who among the following is best advised
III. Equal to purchase a term plan?
a. An individual who needs money at
IV. Substantially higher
the end of insurance term
b. An individual who needs insurance
Answer III I and has a high budget
c. An individual who needs insurance
but has a low budget
Self-Examination Questions d. An individual who needs an
1. ___________ life insurance pays off a insurance product that gives high
policyholder's mortgage in the event of returns
the person's death. 8. Which of the below statement is
a. Term incorrect with regards to decreasing
b. Mortgage term assurance?
c. Whole a. Death benefit amount decreases
d. Endowment with the term of coverage
2. The ________ the premium paid by you b. Premium amount decreases with the
towards your life insurance, the term of coverage
________ will be the compensation paid c. Premium remains level throughout
to the beneficiary in the event of your the term
death. d. Mortgage redemption plans are an
a. Higher, Higher example of decreasing term
b. Lower, Higher assurance plans
c. Higher, Lower 9. Which of the below statement is correct
d. Faster, Slower with regards to endowment assurance
3. Which of the below option is correct plan?
with regards to a term insurance plan? a. It has a death benefit component
a. Term insurance plans come with life- only
long renewability option b. It has a survival benefit component
b. All term insurance plans come with a only
built-in disability rider c. It has both a death benefit as well as
c. Term insurance can be bought as a a survival component
stand-alone policy as well as a rider d. It is similar to a term plan
with another policy 10. Which of the below is an example of an
d. There is no provision in a term endowment assurance plan?
insurance plans to convert it into a a. Mortgage Redemption Plan
whole life insurance plan b. Credit Life Insurance Plan
c. Money Back Plan I. Term assurance
d. Whole Life Plan II. Universal life insurance
Q.No. 1 2 3 4 5 6 7 8 9 10 III. Endowment insurance
Ans. B A C C A C C B C C IV. Whole life insurance
2. Which of the below statement is incorrect?
I. Variable life insurance is a
CHAPTER 9 temporary life insurance policy
II. Variable life insurance is a
LIFE INSURANCE PRODUCTS –II permanent life insurance policy
 III. The policy has a cash value account
A critical point of concern with respect to life IV. The policy provides a minimum
insurance policies has been the issue of giving death benefit guarantee
a competitive rate of return which is
comparable to that of other assets in the
financial marketplace.
Answer II I
Some of the trends that led to the upswing in
non-traditional life products include
unbundling, investment linkage and
transparency. 1. What does inter-temporal allocation of
resources refer to?
a. Postponing allocation of resources
until the time is right
b. Allocation of resources over time
c. Temporary allocation of resources
d. Diversification of resource allocation
2. Which among the following is a limitation
of traditional life insurance products?
a. Yields on these policies is high
b. Clear and visible method of arriving at
surrender value
c. Well defined cash and savings value
Universal life insurance is a form of component
permanent life insurance characterised by its d. Rate of return is not easy to ascertain
flexible premiums, flexible face amount and 3. Where was the Universal Life Policy
death benefit amounts, and the unbundling of introduced first?
its pricing factors. a. USA
b. Great Britain
Variable life insurance is a kind of “Whole c. Germany
Life” policy where death benefit and cash d. France
value of the policy fluctuates according to the 4. Who among the following is most likely to
investment performance of a special buy variable life insurance?
investment account into which premiums are a. People seeking fixed return
credited. b. People who are risk averse and do not
 dabble in equity
Unit linked plans, also known as ULIP‟s c. Knowledgeable people comfortable
emerged as one of the most popular and with equity
significant products, supplanting traditional d. Young people in general
plans in many markets. 5. Which of the below statement is true
regarding ULIP‟s?
Unit linked policies provide the means for a. Value of the units is determined by a
directly and immediately cashing on the formula fixed in advance
benefits of a life insurer’s investment b. Investment risk is borne by the insurer
performance. c. ULIP‟s are opaque with regards to their
term, expenses and savings
Test Yourself components
1. Which among the following is a non- d. ULIP‟s are bundled products
traditional life insurance product?

6. All of the following are characteristics of CHAPTER 10
variable life insurance EXCEPT:
a. Flexible premium payments APPLICATIONS OF LIFE
b. Cash value is not guaranteed INSURANCE
c. Policy owner selects where savings
Section 6 of the Married Women‟s Property
reserve is invested
Act, 1874 provides for security of benefits
d. Minimum Death benefit is guaranteed
under a life insurance policy to the wife and
7. Which of the below is correct with regards
children.
to universal life insurance?
Statement I: It allows policy owner to vary
payments
Statement II: Policy owner can earn
market based rate of return on cash value
a. I is true
b. II is true
c. I and II are true
d. I and II are false
8. All of the following is true regarding
ULIP‟s EXCEPT:
a. Unit holder can choose between
different kind of funds The policy effected under MWP Act shall be
b. Life insurer provides guarantee for unit beyond the control of court attachments,
values creditors and even the life assured.
c. Units may be purchased by payment of
a single premium or via regular Keyman insurance is an important form of
premium payments. business insurance. It can be described as an
d. ULIP policy structure is transparent insurance policy taken out by a business to
with regards to the insurance expenses compensate at for financial losses that would
component arise from the death or extended capacity of
9. As per IRDAI norms, an insurance company an important member of the business.
can provide which of the below non-
traditional savings life insurance products Mortgage redemption insurance is basically a
are permitted in India? decreasing term life insurance policy taken by
Choice I: Unit Linked Insurance Plans a mortgagor to repay the balance on a
Choice II: Variable Insurance Plans mortgage loan if he/she dies before its full
a. I only repayment.
b. II only
c. I and II both Test Yourself
d. Neither I nor II 1. What is the objective behind Mortgage
10. What does unbundling of life insurance Redemption Insurance?
products refers to? I. Facilitate cheaper mortgage rates
a. Correlation of life insurance products II. Provide financial protection for
with bonds home loan borrowers
b. Correlation of life insurance products III. Protect value of the mortgaged
with equities property
c. Amalgamation of protection and IV. Evade eviction in case of default
savings element Answer-II.
d. Separation of the protection and
savings element
1. What does unbundling of life insurance
Q.No. 1 2 3 4 5 6 7 8 9 10 products refers to?
Ans. B D A C C A C B C D a. Correlation of life insurance
products with bonds
b. Correlation of life insurance
products with equities
c. Amalgamation of protection and
savings element

d. Separation of the protection and d. Neither I nor II is true
savings element 8. Ajay pays insurance premium for his
2. Mortgage redemption insurance (MRI) can employees. Which of the below insurance
be categorised under ________. premium will not be treated deductible as
a. Increasing term life assurance compensation paid to employee?
b. Decreasing term life assurance Choice I: Health insurance with benefits
c. Variable life assurance payable to employee
d. Universal life assurance Choice II: Keyman life insurance with
benefits payable to Ajay
3. Which of the below losses are covered a. I only
under keyman insurance? b. II only
a. Property theft c. Both I and II
b. Losses related to the extended d. Neither I nor II
period when a key person is unable 9. The practice of charging interest to
to work borrowers who pledge their property as
c. General liability collateral but leaving them in possession
d. Losses caused due to errors and of the property is called _____________.
omission a. Security
4. A policy is effected under the MWP Act. If b. Mortgage
the policyholder does not appoint a c. Usury
special trustee to receive and administer d. Hypothecation
the benefits under the policy, the sum 10. Which of the below policy can provide
secured under the policy becomes payable protection to home loan borrowers?
to the _____________. a. Life Insurance
a. Next of kin b. Disability Insurance
b. Official Trustee of the State c. Mortgage Redemption Insurance
c. Insurer d. General Insurance
d. Insured
5. Mahesh ran a business on borrowed Q.No. 1 2 3 4 5 6 7 8 9 10
capital. After his sudden demise, all the Ans. B B B B C B B B B C
creditors are doing their best to go after
Mahesh‟s assets. Which of the below
assets is beyond the reach of the CHAPTER 11
creditors? PRICING AND VALUATION IN
a. Property under Mahesh‟s name
b. Mahesh‟s bank accounts LIFE INSURANCE
c. Term life insurance policy purchased 
under Section 6 of MWP Act In ordinary language, the term premium
d. Mutual funds owned by Mahesh denotes the price that is paid by an insured
6. Which of the below option is true with for purchasing an insurance policy.
regards to MWP Act cases?
Statement I: Maturity claims cheques are The process of setting the premium for life
paid to policyholders insurance policies involves consideration of
Statement II: Maturity claims cheques are mortality, interests, expense management
paid to trustees and reserves.
a. I is true
b. II is true
c. Both I and II are true
d. Neither I nor II is true
7. Which of the below option is true with
regards to MWP act cases?
Statement I: Death claims are settled in
favour of nominees
Statement II: Death claims are settled in
favour of trustees
a. I is true
b. II is true
c. Both I and II are true

Components of Premium Test Yourself
1. What does a policy lapse mean?
I. Policyholder completes premium
payment for a policy
II. Policyholder discontinues premium
payment for a policy
III. Policy attains maturity
IV. Policy is withdrawn from the
market
2. Who bears the investment risk in case of
ULIPs?
I. Insurer
II. Insured
III. State
IV. IRDA
Gross premium is the net premium plus an
amount called loading. Answer II II
A lapse means that the policyholder

discontinues payment of premiums. In case Self-Examination Questions
of withdrawals, the policyholder surrenders 1. What does the term “premium” denote
the policy and receives an amount from the in relation to an insurance policy?
policy’s acquired cash value. a. Profit earned by the insurer
b. Price paid by an insured for
Surplus arises as a result of the life insurer’s purchasing the policy
actual experience being better than what it c. Margins of an insurer on a policy
had assumed. d. Expenses incurred by an insurer on a
policy
Surplus allocation could be towards 2. Which of the below is not a factor in
maintaining solvency requirements, determining life insurance premium?
increasing free assets etc. a. Mortality
b. Rebate
The most common form of bonus is the c. Reserves
reversionary bonus. d. Management expenses
Types of Reversionary Bonuses 3. What is a policy withdrawal?
a. Discontinuation of premium
payment by policyholder
b. Surrender of policy in return for
acquired surrender value
c. Policy upgrade
d. Policy downgrade
4. Which of the below is one of the ways of
defining surplus?
a. Excessive liabilities
b. Excessive turnover
c. Excess value of liabilities over assets
d. Excess value of assets over liabilities
5. Which of the below is not a component
of ULIP premiums?
a. Policy allocation charge
b. Investment risk premium
c. Mortality charge
d. Social security charge

6. Life insurance companies may offer CHAPTER 12
rebate to the buyer on the premium that
is payable on the basis of ___________. DOCUMENTATION –PROPOSAL
a. Sum assured chosen by the buyer STAGE
b. Type of policy chosen by the buyer

c. Term of the plan chosen by the Prospectus is a formal legal document used by
buyer insurance companies that provides details
d. Mode of payment (cash, cheque, about the product.
card) chosen by the buyer
7. Interest rates are one of the important The application document used for making
components used while determining the the proposal is commonly known as the
premium. Which of the below statement “proposal form‟.
is correct with regards to interest rates?
a. Lower the interest rate assumed, Matters of health, habits and occupation,
lower the premium income and family details need to be
b. Higher the interest rate assumed, mentioned by the agent in the agent’s report.
higher the premium 
c. Higher the interest rate assumed, Details pertaining to physical features like
lower the premium height, weight, blood pressure, cardiac status
d. The interest rates don‟t affect etc. are recorded and mentioned by the
premiums doctor in his/ her report called the medical
8. Which of the below statement is examiner’s report.
correct?
a. Business strain is the difficulty faced Moral hazard is the likelihood that a client's
by the companies in securing new behaviour might change as a result of
business purchasing a life insurance policy and such a
b. Business strain arises at the end of change would increase the chance of a loss.
the policy term.
Some documents considered as standard age
c. Business strain arises because of
proofs include school or college certificate,
excess premium
birth certificate extracted from municipal
d. Business strain arises because of
records etc.
excess expenses at the new business
stage .
9. With regards to valuation of assets by
insurance companies, __________ is the
value at which the life insurer has
purchased or acquired its assets.
a. Discounted future value
b. Discounted present value
c. Market value
d. Book value
10. In case of __________, a company
expresses the bonus as a percentage of
basic benefit and already attached
bonuses.
a. Reversionary bonus
b. Compound bonus
c. Terminal bonus
d. Persistency bonus 

Each insurer is required to have an AML policy
Q.No. 1 2 3 4 5 6 7 8 9 10
and accordingly file a copy with IRDAI. The
Ans. B B B D D A C D D B AML program should include internal policies,
procedures and controls and appointment of a
principal compliance officer.

Insurers need to determine the true identity a. School certificate
of their customers. KYC documents like b. Identity card in case of defence
address proof, PAN card and photographs etc. personnel
need to be collected as a part of the KYC c. Ration card
procedure. d. Certificate of baptism
7. Money laundering is the process of
Test Yourself bringing _______ money into an economy
1. During the _________ period, if the by hiding its _______ origin so that it
policyholder has bought a policy and does not appears to be legally acquired.
want it, he / she can return it and get a a. Illegal, illegal
refund. b. Legal, legal
I. Free evaluation c. Illegal, legal
II. Free look d. Legal, illegal
III. Cancellation 8. In case the policyholder is not satisfied
with the policy, he / she can return the
IV. Free trial
policy within the free-look period i.e.
Answer – II
within ________of receiving the policy
Self-Examination Questions document.
1. Which of the below is an example of a. 60 days
standard age proof? b. 45 days
a. Ration card c. 30 days
b. Horoscope d. 15 days
c. Passport 9. Which of the below statement is correct
d. Village Panchayat certificate with regards to a policy returned by a
2. Which of the below can be attributed to policyholder during the free look period?
moral hazard? a. The insurance company will refund
a. Increased risky behaviour following 100% of the premium
the purchase of insurance b. The insurance company will refund
b. Increased risky behaviour prior to 50% of the premium
the purchase of insurance c. The insurance company will refund
c. Decreased risky behaviour the premium after adjusting for
following the purchase of insurance proportionate risk premium for the
d. Engaging in criminal acts post period on cover, medical
being insured examination expenses and stamp
3. Which of the below features will be duty charges
checked in a medical examiner‟s report? d. The insurance company will forfeit
a. Emotional behaviour of the the entire premium
proposer 10. Which of the below is not a valid address
b. Height, weight and blood pressure proof?
c. Social status a. PAN Card
d. Truthfulness b. Voter ID Card
4. A __________ is a formal legal document c. Bank passbook
used by insurance companies that d. Driving licence
provides details about the product.
Q.No. 1 2 3 4 5 6 7 8 9 10
a. Proposal form
Ans. C A B D B C A D C B
b. Proposal quote
c. Information docket
d. Prospectus CHAPTER 13
5. The application document used for
making the proposal is commonly known DOCUMENTATION –POLICY
as the __________. CONDITION –I
a. Application form
b. Proposal form An insurance contract commences when the
c. Registration form life insurance company issues a first premium
d. Subscription form receipt (FPR). The FPR is the evidence that
6. From the below given age proof the policy contract has begun.
documents, identify the one which is
classified as non-standard by insurance
companies.
The policy document is the most important c. Prospectus
document associated with insurance. It is the d. Claim form
evidence of the contract between the assured 2. If complex language is used to word a certain
and the insurance company. policy document and it has given rise to an
ambiguity, how will it generally be construed?
The first premium receipt contains the a. In favour of insured
following information: b. In favour of insurer
i. Name and address of the life assured c. The policy will be declared as void
ii. Policy number and the insurer will be asked to return
iii. Premium amount paid the premium with interest to the
iv. Method and frequency of premium insured
payment d. The policy will be declared as void
v. Next due date of premium payment and the insurer will be asked to return
vi. Date of commencement of the risk the premium to the insured without
vii. Date of final maturity of the policy any interest
viii. Date of payment of the last premium 3. Select the option that best describes a
ix. Sum assured policy document.
a. It is evidence of the insurance
contract
The standard policy document typically has b. It is evidence of the interest
three parts which are the policy schedule, expressed by the insured in buying an
standard provisions and the policy‟s specific insurance policy from the company
provisions. c. It is evidence of the policy
(procedures) followed by an insurance
company when dealing with channel
Policy document components
partners like banks, brokers and other
entities
d. It is an acknowledgement slip issued
by the insurance company on payment
of the first premium
4. Which of the below statement is correct?
a. The proposal form acceptance is the
evidence that the policy contract has
begun
b. The acceptance of premium is
evidence that the policy has begun
c. The First Premium Receipt is the
evidence that the policy contract has
begun
d. The premium quote is evidence that
the policy contract has begun
Test Yourself
5. For the subsequent premiums received by
1. What does a first premium receipt (FPR)
the insurance company after the first
signify? Choose the most appropriate option.
premium, the company will issue
I. Free look period has ended
__________.
II. It is evidence that the policy
a. Revival premium receipt
contract has begun
b. Restoration premium receipt
III. Policy cannot be cancelled now
c. Reinstatement premium receipt
IV. Policy has acquired a certain cash
d. Renewal premium receipt
value 6. What will happen if the insured person
Answer – II loses the original life insurance policy
document?
Self-Examination Questions a. The insurance company will issue a
1. Which of the following documents is an duplicate policy without making any
evidence of the contract between insurer changes to the contract
and insured? b. The insurance contract will come to
a. Proposal form an end
b. Policy document

c. The insurance company will issue a
duplicate policy with renewed terms
CHAPTER 14
and conditions based on the current DOCUMENTATION -POLICY
health declarations of the life insured
d. IV. The insurance company will issue a
CONDITION-II
The grace period clause grants the
duplicate policy without making any
policyholder an additional period of time to
changes to the contract, but only
pay the premium after it has become due.
after a Court order.
7. Which of the below statement is correct?
Reinstatement is the process by which a life
a. The policy document has to be signed
insurance company puts back into force a
by a competent authority but need
policy that has either been terminated
not be compulsorily stamped
because of non-payment of premiums or has
according to the Indian Stamp Act.
been continued under one of the non-
b. The policy document has to be signed
forfeiture provisions.
by a competent authority and should
be stamped according to the Indian
A policy loan is different from an ordinary
Stamp Act.
commercial loan in two respects, firstly the
c. The policy document need not be
policy owner is not legally obligated to repay
signed by a competent authority but
the loan and the insurer need not perform a
should be stamped according to the
credit check on the insured.
Indian Stamp Act.
d. The policy document neither needs to
Nomination is where the life assured proposes
be signed by a competent authority
the name of the person(s) to which the sum
nor it needs to be compulsorily
assured should be paid by the insurance
stamped according to the Indian
company after their death.
Stamp Act.
Provisions related to nomination
8. Which of the below forms the first part of
a standard insurance policy document?
a. Policy schedule
b. Standard provisions
c. Specific policy provisions
d. Claim procedure
9. In a standard insurance policy document,
the standard provisions section will have
information on which of the below?
a. Date of commencement, date of
maturity and due date of last
premium
b. Name of nominee
c. The rights and privileges and other
conditions, which are applicable
under the contract
The assignment of a life insurance policy
d. The signature of the authorised
implies the act of transferring the rights right,
signatory and policy stamp
title and interest in the policy (as property)
10. “A clause precluding death due to
from one person to another. The person who
pregnancy for a lady who is expecting at
transfers the rights is called assignor and the
the time of writing the contract” will be
person to whom property is transferred is
included in which section of a standard
called assignee.
policy document?
Types of Assignment
a. Policy schedule
b. General provisions
c. Standard provisions
d. Specific policy provisions
Q.No. 1 2 3 4 5 6 7 8 9 10
Ans. B A A C D A B A C D

a. Premiums must be paid for at least 2
consecutive years
b. Premiums must be paid for at least 3
consecutive years
c. Premiums must be paid for at least 4
consecutive years
d. Premiums must be paid for at least 5
consecutive years
3. When is a policy deemed to be lapsed?
a. If the premiums are not paid on due
date
Provisions related to assignment of b. If the premiums are not paid before
insurance policies the due date
c. If the premium has not been paid
even during days of grace
d. If the policy is surrendered
4. Which of the below statement is correct
with regards to grace period of an
insurance policy?
a. The standard length of the grace
period is one month.
b. The standard length of the grace
period is 30 days.
c. The standard length of the grace
period is one month or 30 days.
d. The standard length of the grace
period is one month or 31 days.
Alteration is subject to consent of both the 5. What will happen if the policyholder does
insurer and assured. Normally alterations may not pay the premium by the due date and
not be permitted during the first year of the dies during the grace period?
policy, except for some simple ones. a. The insurer will consider the policy
void due to non-payment of premium
Test Yourself by the due date and hence reject the
1. Under what circumstances would the claim
policyholder need to appoint an appointee? b. The insurer will pay the claim and
I. Insured is minor waive off the last unpaid premium
II. Nominee is a minor c. The insurer will pay the claim after
III. Policyholder is not of sound mind deducting the unpaid premium
d. The insurer will pay the claim after
IV. Policyholder is not married
deducting the unpaid premium along
Answer – II
with interest which will be taken as
2% above the bank savings interest
rate
1. Which of the below statement is false with 6. During the revival of a lapsed policy,
regards to nomination? which of the below aspect is considered
a. Policy nomination is not cancelled if most significant by the insurance
the policy is assigned to the insurer in
company? Choose the most appropriate
return for a loan
option.
b. Nomination can be done at the time a. Evidence of insurability at revival
of policy purchase or subsequently b. Revival of the policy leading to
c. Nomination can be changed by making
increase in risk for the insurance
an endorsement in the policy
company
d. A nominee has full rights on the whole c. Payment of unpaid premiums with
of the claim interest
2. In order for the policy to acquire a d. Insured submitting the revival
guaranteed surrender value, for how long application within a specified time
must the premiums be paid as per law? frame

7. For an insurance policy nomination is CHAPTER 15
allowed under _________ of the Insurance
Act, 1938. UNDERWRITING
a. Section 10
b. Section 38 To usher equity, the underwriter engages in
c. Section 39 risk classification where individual lives are
d. Section 45 categorised and assigned to different risk
8. Which of the below statement is incorrect classes depending on the degree of risks they
with regards to a policy against which a pose.
loan has been taken from the insurance
company?
a. The policy will have to be assigned in
favour of the insurance company
b. The nomination of such policy will get
cancelled due to assignment of the
policy in favour of the insurance
company
c. The nominee‟s right will affected to
the extent of the insurer‟s interest in
the policy
d. The policy loan is usually limited to a
percentage of the policy‟s surrender Underwriting or the selection process may be
value said to take place at two levels:
9. Which of the below statement is incorrect
with regards to assignment of an insurance At field level and
policy? At underwriting department level
a. In case of Absolute Assignment, in the
event of death of the assignee, the
title of the policy would pass to the
estate of the deceased assignee.
b. The assignment of a life insurance
policy implies the act of transferring
the rights right, title and interest in
the policy (as property) from one
person to another.
c. It is necessary that the policyholder
must give notice of assignment to the Judgment method or numerical method of
insurer. underwriting is widely used for underwriting
d. In case of Absolute Assignment, the insurance proposals.
policy vests absolutely with the
assignee till maturity, except in case
of death of the insured during the
policy tenure, wherein the policy
reverts back to the beneficiaries of
the insured.
10. Which of the below alteration will be
permitted by an insurance company?
Underwriting decisions made by underwriters
a. Splitting up of the policy into two or
include acceptance of standard risk at
more policies
standard rates or charging extra for sub-
b. Extension of the premium paying term
standard risks. Sometimes there is acceptance
c. Change of the policy from with profit
with lien on sum assured or acceptance is
policy to without profit policy
based on restrictive clauses. Where the risk is
d. Increase in the sum assured
large the proposal is declined or postponed.
Q.No. 1 2 3 4 5 6 7 8 9 10
Ans. D B C D B A C B D A

Underwriting decisions Test Yourself
1. Which of the following cases is likely to be
declined or postponed by a life insurer?
I. Healthy 18 year old
II. An obese person
III. A person suffering from AIDS
IV. Housewife with no income of her
own
2. Which of the following is an example of
moral hazard?
I. Stunt artist dies while performing a
stunt
II. A person drinking copious amounts
A large number of life insurance proposals of alcohol because he is inured
may typically get selected for insurance III. Insured defaulting on premium
without conducting a medical examination payments
to check the insurability of an insurant. IV. Proposer lying on policy document
Such cases are termed as non-medical 3. Why is heredity history of importance in
proposals. medical underwriting?
I. Rich parents have healthy kids
Some of the rating factors for non-medical II. Certain diseases can be passed on
underwriting include from parents to children
Age III. Poor parents have malnourished
Large sum assured kids
Moral hazard etc. IV. Family environment is a critical
factor
Answer III II II
1. Which of the following denotes the
underwriter‟s role in an insurance
company?
a. Process claims
b. Decide acceptability of risks
c. Product design architect
Some of the factors considered in medical d. Customer relations manager
underwriting include 2. Which of the following is not an
Family history, underwriting decision?
Heredity and personal history etc a. Risk acceptance at standard rates
b. Declinature of risk
Medical Factors that influence an c. Postponement of risk
Underwriter‘s Decision d. Claim rejection
3. Which of the following is not a standard
age proof?
a. Passport
b. School leaving certificate
c. Horoscope
d. Birth certificate
4. Which of the following condition will affect a
person‟s insurability negatively?
a. Daily jogs
b. Banned substance abuse
c. Lazy nature
d. Procrastination

5. Under what method of underwriting does a. Standard lives
an underwriter assign positive rating b. Preferred risks
points for all negative or adverse factors c. Substandard lives
(negative points for any positive or d. Declined lives
favourable factors)?
a. Judgment Q.No. 1 2 3 4 5 6 7 8 9 10
b. Arbitrary Ans. B D C B C A D B A B
c. Numerical rating
d. Single step
6. Under risk classification, ___________ CHAPTER 16
consist of those whose anticipated PAYMENTS UNDER A LIFE
mortality corresponds to the standard
lives represented by the mortality table. INSURANCE POLICY
a. Standard lives A claim is a demand that the insurer should
b. Preferred risks make good the promise specified in the
c. Sub-standard lives contract.
d. Declined lives Types of claims
7. Amruta is pregnant. She has applied for a
term insurance cover. Which of the below
option will be the best option to choose
for an underwriter to offer insurance to
Amruta? Choose the most likely option.
a. Acceptance at ordinary rates
b. Acceptance with extra premium
c. Decline the proposal
d. Acceptance with a restrictive clause
8. Which of the below insurance proposal is A claim can be survival claim or death claim.
not likely to qualify under non-medical While a death claim arises only upon the
underwriting? death of the life assured, survival claims can
a. Savita, aged 26 years, working in an IT be caused by one or more events
company as a software engineer
b. Mahesh, aged 50 years, working in a For payment of a survival claim, the insurer
coal mine has to ascertain that the event has occurred
c. Satish, aged 28 years, working in a as per the conditions stipulated in the policy.
bank and has applied for an insurance
cover of Rs. 1 crore The following payments may occur during the
d. Pravin, aged 30 years, working in a policy term:
departmental store and has applied Survival Benefit Payments
for an endowment insurance plan for Surrender of Policy
a tenure of 10 years Rider Benefit
9. Sheena is suffering from acute diabetes. She Maturity Claim
has applied for an insurance plan. In this case Death Claim
the underwriter is most likely to use Forms to be submitted for Death Claim
____________ for underwriting. Choose the
most appropriate option.
a. Judgment method
b. Numerical method
c. Any of the above method since an
illness like diabetes does not play a
major role in the underwriting process
d. Neither of the above method as
diabetes cases are rejected outright
10. Santosh has applied for a term insurance
policy. His anticipated mortality is
significantly lower than standard lives and
hence could be charged a lower premium.
Under risk classification, Santosh will be
classified under ___________.
Section 45 (Indisputability Clause) of the submitted in case of accidental death as
Insurance Act offers protection against compared to natural death.
rejection of claim by the insurer on flimsy a. Certificate of burial or cremation
grounds provided and sets a time limit of 3 b. Treating physician‟s certificate
years for the Insurer for calling a policy into c. Employer‟s certificate
question. d. Inquest Report
Under the IRDAI (Protection of Policyholders 4. Which of the below death claim will be
Interests) Regulations, 2002, the IRDAI has treated as an early death claim?
laid down regulations to safeguard / protect a. If the insured dies within three years of
the insured or beneficiary in case of claims. policy duration
b. If the insured dies within five years of
Test Yourself policy duration
1. Which of the below statement best c. If the insured dies within seven years of
describes the concept of claim? Choose the policy duration
most appropriate option. d. If the insured dies within ten years of
I. A claim is a request that the insurer policy duration
should make good the promise 5. Given below are some events that will
specified in the contract trigger survival claims. Identify which of
II. A claim is a demand that the insurer the below statement is incorrect?
should make good the promise a. Claim paid on maturity of a term
specified in the contract insurance policy
III. A claim is a demand that the b. An instalment payable upon reaching
insured should make good the the milestone under a money-back
commitment specified in the policy
agreement c. Claim paid for critical illnesses covered
IV. A claim is a request that the under the policy as a rider benefit
insured should make good the promise d. Surrender value paid on surrender of an
specified in the agreement endowment policy by the policyholder
Answer –II 6. A payment made under a money-back
policy upon reaching a milestone will be
Self-Examination Questions classified under which type of claim?
a. Death claim
b. Maturity claim
1. Given below is a list of policies. Identify
c. Periodical survival claim
under which type of policy, the claim
d. Surrender claim
payment is made in the form of periodic
7. Shankar bought a 10 year Unit Linked
payments?
Insurance Plan. If he dies before the
a. Money-back policy
maturity of the policy which of the
b. Unit linked insurance policy
below will be paid?
c. Return of premium policy
a. Lower of sum assured or fund value
d. Term insurance policy
b. Higher of sum assured or fund value
2. Mahesh has bought a life insurance policy
c. Premiums paid will be returned with 2%
with a critical illness rider. He has made
higher interest rate as compared to a
absolute assignment of the policy in
bank‟s savings deposit
favour of Karan. Mahesh suffers a heart
d. Surrender value
attack and there is a claim of Rs. 50,000
8. Based on classification of claims (early or
under the critical illness rider. To whom
non-early), pick the odd one out?
will the payment be made in this case?
a. Ramya dies after 6 months of buying a
a. Mahesh
term insurance plan
b. Karan
b. Manoj dies after one and half years of
c. The payment will be shared equally by
buying a term insurance plan
Mahesh and Karan
c. David dies after two and half years of
d. Neither of the two because Mahesh has
suffered the heart attack but the policy
d. Pravin dies after five and half years of
is assigned in favour of Karan.
3. Praveen died in a car accident. The
9. Given below is a list of documents to be
beneficiary submits documents for death
submitted for a normal death claim by
claim. Which of the below document is
all beneficiaries in the event of death of
an additional document required to be
life insured. Pick the odd one out which
is additionally required to be submitted
only in case of death by accident.
a. Inquest report
b. Claim form
c. Certificate of burial or cremation
d. Hospital‟s certificate
10. As per IRDAI (Protection of Policyholders
Interests) Regulations, 2002, a claim
under a life policy shall be paid or be
disputed, within 30 days from the date
of receipt of all relevant papers and
clarifications required.
a. 7 days
b. 15 days
c. 30 days
d. 45 days
Q.No. 1 2 3 4 5 6 7 8 9 10
Ans. A B D A A C B D A C

CHAPTER 18
SECTION 3 INSURANCE DOCUMENTATION
HEALTH SECTION The first stage of documentation is the

proposal form through which the insured
informs about herself and what insurance she
needs
CHAPTER 17 The duty of disclosure of material information
INTRODUCTION TO HEALTH arises prior to the inception of the policy, and
continues throughout the policy period
INSURANCE
Insurance companies usually add a declaration
Insurance in some form or other existed many at the end of the Proposal form to be signed
centuries ago but its modern form is only a by the proposer.
few centuries old. Insurance in India has
passed through many stages with government Elements of a proposal form usually include:
regulation.
i. Proposer‟s name in full
Health of its citizens being very important, ii. Proposer‟s address and contact details
governments play a major role in creating a iii. Bank details in case of health policies
suitable healthcare system. iv. Proposer‟s profession, occupation or
business
Level of healthcare provided depends on v. Details and identity of the subject matter
many factors relating to a country‟s of insurance
population.
vi. Sum insured
vii. Previous and present insurance
The three type of healthcare are primary,
viii. Loss experience
secondary and tertiary depending on the level
of medical attention required. Cost of ix. Declaration by the insured
healthcare rises with each level with tertiary
care being the costliest. An agent, who acts as the intermediary, has
the responsibility to ensure all material
India has its own peculiar challenges such as information about the risk is provided by the
population growth and urbanization which insured to insurer.
require proper healthcare.
The process of scrutinising the proposal and
The government was also the first to come up deciding about acceptance is known as
with schemes for health insurance followed underwriting.
later by commercial insurance by private
insurance companies. In health policies, a Prospectus is also
provided to the insured and he has to declare
The health insurance market is made up of in the proposal that he has read and
many players some providing the understood it
infrastructure, with others providing
insurance services, intermediaries such as Premium is the consideration or amount paid
brokers, agents and third party administrators by the insured to the insurer for insuring the
servicing health insurance business and also subject matter of insurance, under a contract
other regulatory, educational as well as legal of insurance.
entities playing their role.
Payment of premium can be made by cash,
any recognised banking negotiable
instrument, postal money order, credit or
debit card, internet, e-transfer, direct credit
or any other method approved by authority
from time to time.

A certificate of insurance provides proof of I. A warranty is a condition which is
insurance in cases where it may be required implied without being stated in the
policy
The policy is a formal document which II. A warranty is a condition expressly
provides an evidence of the contract of stated in the policy
insurance. III. A warranty is a condition expressly
stated in the policy and communicated
A warranty is a condition expressly stated in to the insured separately and not as
the policy which has to be literally complied part of the policy document
with for validity of the contract. IV. If a warranty is breached, the claim
can still be paid if it is not material to
If certain terms and conditions of the policy the risk
need to be modified at the time of issuance, 4. If certain terms and conditions of the
it is done by setting out the amendments / policy need to be modified at the time of
changes through a document called issuance, it is done by setting out the
endorsement. amendments through __________.
I. Warranty
The most important rule of construction is II. Endorsement
that the intention of the parties must prevail III. Alteration
and this intention is to be looked for in the
IV. Modifications are not possible
policy itself.
with regards to renewal notice?
Money Laundering means converting money
I. As per regulations there is a legal
obtained through criminal means to legal
obligation on insurers to send a
money and laws to fight this have been
renewal notice to insured, 30 days
introduced worldwide and in India
before the expiry of the policy
An agent has a responsibility to follow the II. As per regulations there is a legal
Know Your Customer guidelines and obtain obligation on insurers to send a
documents as required by these guidelines. renewal notice to insured, 15 days
before the expiry of the policy
III. As per regulations there is a legal
Test Yourself obligation on insurers to send a
1. As per guidelines, an insurance company renewal notice to insured, 7 days
has to process an insurance proposal within before the expiry of the policy
__________. IV. As per regulations there is no legal
I. 7 days obligation on insurers to send a
II. 15 days renewal notice to insured before the
III. 30 days expiry of the policy
IV. 45 days
2. In case the premium payment is made by
cheque, then which of the below statement CHAPTER 19
will hold true?
I. The risk may be assumed on the HEALTH INSURANCE
date on which the cheque is posted PRODUCTS
II. The risk may be assumed on the
date on which the cheque is deposited a) A health insurance policy provides financial
by the insurance company protection to the insured person in the event
III. The risk may be assumed on the of an unforeseen and sudden accident /
date on which the cheque is received illness leading to hospitalization.
by the insurance company
IV. The risk may be assumed on the b) Health insurance products can be classified
date on which the cheque is issued by on the basis of number of people covered
the proposer under the policy: individual policy, family
3. Which of the below statement is correct floater policy, group policy.
with regards to a warranty?
c) A hospitalization expenses policy or
Mediclaim reimburses the cost of
hospitalization expenses incurred on account exposure to the risk of accident, injury and
of illness / accident. sickness during his stay overseas.
d) Pre hospitalization expenses would be p) Corporate Frequent Travelers‟ Plan is an

relevant medical expenses incurred during annual policy whereby a corporate takes
period up to the defined number of days individual policies for its executives who
(generally 30 days) prior to hospitalization frequently make trips outside India.
and will be considered as part of claim.
q) Many terms used in health insurance have
e) Post hospitalization expenses would be been standardized by IRDA by regulation to
relevant medical expenses incurred during avoid confusion especially for the insureds.
period up to the defined number of days
(generally 60 days) after hospitalization and
Test Yourself
will be considered as part of claim.
1. Though the duration of cover for pre-
f) In a family floater policy, the family hospitalization expenses would vary from
consisting of spouse, dependent children and insurer to insurer and is defined in the policy,
dependent parents are offered a single sum the most common cover is for ________ pre-
insured which floats over the entire family. hospitalization.
I. Fifteen days
g) A hospital daily cash policy provides a fixed II. Thirty days
sum to the insured person for each day of III. Forty Five days
hospitalization. IV. Sixty days
2. As per IRDA guidelines, a ________ grace
h) Critical illness policy is a benefit policy period is allowed for renewal of individual
with a provision to pay a lump sum amount on health policies.
diagnosis of certain named critical illness. I. Fifteen days
II. Thirty days
i) High Deductible or Top-up Covers offer III. Forty Five days
cover for higher sum insured over and above a IV. Sixty days
specified chosen amount (called threshold or
deductible). Self-Examination Questions
j) The fixed benefits cover provides adequate with regards to a hospitalization expenses
cover to the insured person and also helps the policy?
insurer to effectively price his policy a. Only hospitalization expenses are
covered
k) A Personal Accident (PA) Cover provides b. Hospitalization as well as pre and post
compensation in the form of death and hospitalization expenses are covered
disability benefits due to unforeseen c. Hospitalization as well as pre and post
accidents. hospitalization expenses are covered
and a lumpsum amount is paid to the
l) Out-patient covers provide for medical family members in the event of
expenses like dental treatments, vision care insured s death
expenses, routine medical examinations and d. Hospitalization expenses are covered
tests etc. that do not require hospitalization. from the first year and pre and post
hospitalization expenses are covered
m) A group policy is taken by a group owner from the second year if the first year
who could be an employer, an association, a is claim free.
bank‟s credit card division, where a single 2. Identify which of the below statement is
policy covers the entire group of individuals. correct?
a. Health insurance deals with morbidity
n) Corporate Floater or Buffer Cover amount b. Health insurance deals with mortality
helps meet excess expenses over and above c. Health insurance deals with morbidity
the family sum insured. as well as mortality
d. Health insurance neither deals with
o) Overseas Mediclaim / Travel Policies morbidity or mortality
provide cover to an individual against

3. Which of the below statement is correct maintaining the competitiveness and yet
with regards to cashless service provided profitability for the organisation.
in health insurance?
a. It is an environment friendly go-green Some of the factors which affect a person‟s
initiative started by insurance morbidity are age, gender, habits,
companies to promote electronic occupation, build, family history, past illness
payments so that circulation of or surgery, current health status and place of
physical cash notes can be reduced residence.
and trees can be saved.
b. Service is provided free of cost to the The purpose of underwriting to prevent
insured and no cash is to be paid as adverse selection against the insurer and also
the payment is made by the ensure proper classification and equity among
Government to the insurance risks.
company under a special scheme
c. All payments made by insured have to The agent is the first level underwriter as he
be made only through internet is in the best position to know the prospective
banking or cards as cash is not client to be insured.
accepted by the insurance company
d. The insured does not pay and the The core principles of insurance are: utmost
insurance company settles the bill good faith, insurable interest, indemnity,
directly with the hospital contribution, subrogation and proximate
4. Identify the correct full form of PPN with cause.
regards to hospitals in health insurance.
a. Public Preferred Network The key tools for underwriting are: proposal
b. Preferred Provider Network form, age proof, financial documents,
c. Public Private Network medical reports and sales reports.
d. Provider Preferential Network
5. Identify which of the below statement is Medical underwriting is a process which is
incorrect? used by the insurance companies to
a. An employer can take a group policy determine the health status of an individual
for his employees applying for health insurance policy.
b. A bank can take a group policy for its
customers Non-medical underwriting is a process where
c. A shopkeeper can take a group policy the proposer is not required to undergo any
for its customers medical examination.
d. A group policy taken by the employer
for his employees can be extended to Numerical rating method is a process adopted
include the family members of the in underwriting, wherein numerical or
employees percentage assessments are made on each
Q.No. 1 2 3 4 5 aspect of the risk.
Ans. B A D B C
The underwriting process is completed when
the received information is carefully assessed
CHAPTER 20 and classified into appropriate risk categories.
Group insurance is mainly underwritten based
HEALTH INSURANCE on the law of averages, implying that when all
UNDERWRITING members of a standard group are covered
under a group health insurance policy, the
individuals constituting the group cannot anti-
Health insurance is based on the concept of
select against the insurer.
morbidity which is defined as the risk of a
person falling ill or sick.
Underwriting is the process of risk selection

and risk pricing.
Underwriting is required to strike a proper

balance between risk and business thereby

IV. Statement 1 and statement 2 are
false
Q.No. 1 2 3 4 5
Ans. III III I IV IV
1. Which of the following factor does not
affect the morbidity of an individual?
Test Yourself a. Gender
1. Underwriting is the process of ______. b. Spouse job
I. Marketing insurance products c. Habits
II. Collecting premiums from d. Residence location
customers 2. According to the principle of indemnity,
III. Risk selection and risk pricing the insured is paid for __________.
IV. Selling various insurance products a. The actual losses to the extent of the
2. The principle of utmost good faith in sum insured
underwriting is required to be followed by b. The sum insured irrespective of the
___________. amount actually spent
I. The insurer c. A fixed amount agreed between both
II. The insured the parties
III. Both the insurer and the insured d. The actual losses irrespective of the
IV. The medical examiners sum assured
3. Insurable interest refers to ____________. 3. The first and the primary source of
I. Financial interest of the person in information about an applicant, for the
the asset to be insured underwriter is his ________________.
II. The asset which is already insured a. Age proof documents
III. Each insurer‟s share of loss when b. Financial documents
more than one company covers the c. Previous medical records
same loss d. Proposal form
IV. The amount of the loss that can be 4. The underwriting process is completed
recovered from the insurer when ___________________.
4. Which of the following statements about a. All the critical information related to
medical underwriting is incorrect? the health and personal details of the
I. It involves high cost in collecting and proposer are collected through the
assessing medical reports. proposal form
b. All the medical examinations and
II. Current health status and age are
tests of the proposer are completed
the key factors in medical
c. The received information is carefully
underwriting for health insurance.
assessed and classified into
III. Proposers have to undergo medical
appropriate risk categories
and pathological investigations to
d. The policy is issued to the proposer
assess their health risk profile.
after risk selection and pricing.
IV. Percentage assessment is made on 5. Which of the following statements about
each component of the risk. the numerical rating method is incorrect?
5. 1) In a group health insurance, any of a. Numerical rating method provides
the individual constituting the group could greater speed in the handling of a
anti-select against the insurer. large business with the help of trained
2) Group health insurance provides coverage personnel.
only to employer-employee groups. b. Analysis of difficult or doubtful cases
is not possible on the basis of
I. Statement 1 is true and statement 2 numerical points without medical
is false referees or experts.
II. Statement 2 is true and statement 1 c. This method can be used by persons
is false without any specific knowledge of
III. Statement 1 and statement 2 are medical science.
true d. It ensures consistency between the
decisions of different underwriters.
Q.No. 1 2 3 4 5
Ans. B A D C B
CHAPTER 21
HEALTH INSURANCE CLAIMS
Insurance is a „promise‟ and the policy is a
“witness‟ to that promise. The occurrence of
insured event leading to a claim under the
policy is the true test of that promise.
One of the key rating parameter in insurance

is the claims paying ability of the insurance
company.
Customers, who buys insurance is the primary

stakeholder as well as the receiver of the
claim.
In Cashless claim a network hospital provides

the medical services based on a pre-approval
from the insurer / TPA and later submits the
documents for settlement of the claim.
In reimbursement claim, the customer pays

the hospital from his own resources and then
files claim with Insurer / TPA for payment.
Claim intimation is the first instance of

contact between the customer and the claims
team.
If a fraud is suspected by insurance company

in case of insurance claim, it is sent for
investigation. Investigation of a claim could
be done in-house by an insurer/TPA or be
entrusted to a professional investigation
agency.
Reserving refers to the amount of provision

made for all claims in the books of the insurer
based on the status of the claims.
In case of a denial, the customer has the

option, apart from the representation to the
insurer, to approach the Insurance Test Yourself
Ombudsman or the consumer forums or even 1.Who among the following is not a
the legal authorities. stakeholder in insurance claim process?
I. Insurance company shareholders
Frauds occur mostly in hospitalization II. Human Resource Department
indemnity policies but Personal accident III. Regulator
policies also are used to make fraud claims. IV. TPA
3. The amount of provision made for all
The TPA provides many important services to claims in the books of the insurer based on
the insurer and gets remunerated in the form the status of the claims is known as ________.
of fees. I. Pooling
II. Provisioning
III. Reserving 4. Under which of the following condition, is
IV. Investing domiciliary hospitalization is covered in a
4. Which of the following documents are not health insurance policy?
required to be submitted for Permanent Total a. The condition of the patient is such
Disability claim? that he/she can be removed to the
I. Duly completed Personal Accident Hospital/Nursing Home , but prefer
claim form signed by the claimant. not to
II. Attested copy of First Information b. The patient cannot be removed to
Report if applicable. Hospital/Nursing Home for lack of
III. Permanent disability certificate accommodation therein
from a civil surgeon or any equivalent c. The treatment can be carried out only
competent doctors certifying the in hospital/Nursing home
disability of the insured. d. Duration of hospitalization is
IV. Fitness certificate from the exceeding 24 hours
treating doctor certifying that the 5. Which of the following codes capture the
insured is fit to perform his normal procedures performed to treat the illness?
duties. a. ICD
5. ________________ are paid upfront by b. DCI
Assistance Company and later claimed from c. CPT
insurance company. d. PCT
I. Bail bond cases Q.No. 1 2 3 4 5
II. Personal accident claims Ans. A B A B C
III. Overseas travel insurance claims
IV. Untenable claims
1. Who among the following is considered as
primary stakeholder in insurance claim
process?
a. Customers
b. Owners
c. Underwriters
d. Insurance agents/brokers
2. Girish Saxena‟s insurance claim was
denied by insurance company. In case of a
denial, what is the option available to
Girish Saxena, apart from the
representation to the insurer?
a. To approach Government
b. To approach legal authorities
c. To approach insurance agent
d. Nothing could be done in case of case
denial
3. During investigation, of a health insurance
claim presented by Rajiv Mehto, insurance
company finds that instead of Rajiv
Mehto, his brother Rajesh Mehto had been
admitted to hospital for treatment. The
policy of Rajiv Mehto is not a family
floater plan. This is an example of
___________fraud.
a. Impersonation
b. Fabrication of documents
c. Exaggeration of expenses
d. Outpatient treatment converted to in-
patient / hospitalization

MOCK TEST – 1 B. The date a claim occurs.
1. The concept of insurance involves a transfer of C. The date the policy document is received.
A. liability B. needs. C. ownership. D. risk. D. The termination date.
2. Rakesh recently bought a health insurance policy 8. Rahul is employed by Sunny. In respect of this
and a personal accident policy. What main section(s) employment, Rahul automatically has insurable
of the insurance market do these products normally interest in Sunny’s life up to what limit, if any?
fall into? A. Rahul’s monthly salary.
A. Life insurance in both cases. B. Rahul’s pension fund value.
B. Life insurance for health and non-life insurance for C. Sunny’s annual profit. D. There is no limit.
personal accident.
C. Non-life insurance in both cases. 9. Arun started a 20-year term insurance policy. Once
D. Non-life insurance for health and life insurance for established, when, if at all, is the insurer next entitled
personal accident. to ask him for proof of continuing good health?
A. At no point.
3. The main role of an underwriter in a life insurance B. After the end of the first 12 months.
company is normally to C. At the point when he changes occupation or
A. assess the acceptability of particular risks. retires.
B. certify a loss when claims are submitted. D. When a lapsed policy is revived.
C. design the structure of the products to be offered.
D. negotiate with the industry regulator. 10. The concept of indemnity is based on the key
principle that policyholders should be prevented from
4. Akshat is a relatively cautious person. In insurance A. insuring existing losses
terms, this will normally increase the likelihood that B. making false insurance claims.
he will C. paying excessively for insurance cover.
A. be considered an above average insurance risk. D. profiting from insurance.
B. be considered a below average insurance risk.
C. require insurance cover. 11. Once an absolute assignment is effected under a
D. require reinsurance cover. life insurance policy, who will be the titleholder(s) of
this policy?
5. How are perils and hazards normally distinguished A. The assignor in all cases.
under term insurance policies? B. The assignee in all cases.
A. Perils are medical factors which influence the risk C. Either the assignor or assignee depending on the
of dying and hazards are lifestyle activities which type of policy involved.
influence the risk of dying. D. The assignor and assignee jointly.
B. Perils are risks that policyholders will die before a
specified date and hazards are factors which could 12. How long is the free look-in period under a term
influence that risk. insurance policy from the date of receipt of the policy
C. Perils are factors which affect the risk being document?
insured and hazards are the size of the risk being A. 5 days. B. 10 days. C. 15 days. D. 20 days.
insured.
D. Perils are factors which could influence an insured 13. Underwriting is the process of
event occurring and hazards are the actual events A. Marketing insurance products
which will trigger a payout. B. Collecting premium from customers
6. In insurance terms, the risk of suffering a disability C. Risk collection and risk pricing
is best described as what type of risk? D. Selling various insurance products
A. Financial B. Fundamental.
C. Homogenous. D. Speculative. 14. A policy document for a money-back policy
includes the statement ‘the proposal and declaration
7. For a household insurance policy, insurable signed by the proposer form the basis of the
interest need only exist at outset and at what other contract’. In which main section of the policy
point? document will this normally appear?
A. The date the cancellation period expires. A. Attestation B. Operative clause

C. Preamble D. Terms and conditions 23. When is the best tim to start financial planning?
A. Post retirement
15. A life insurance policy can only be made paid up B. As soon as one gets his first salary
if what particular policy feature exists? C. After marriage
A. Indexing contribution B. Nomination facility. D. Only after one gets rich
C. Rider benefits D. Savings element.
24. Which among the following is not an objective of
16. The main reason why a life insurance proposal tax plan?
form often asks for the proposer’s height is to enable A. Maximum tax benefit
a reasonable comparison with the proposer’s B. Reduced tax burden as a result of prudent
A. age B. gender C. occupation D. weight investment
C. Tax evasion D. Full advantage of tax breaks
17. Which of the following statement/s is/are correct?
i. In a group health insurance, any of the individuals 25. Which among the following would you
constituting the group could anti-select against recommend on order to seek protection against
insurer. unforeseen events?
ii. Group health insurance provides coverage only to A. Insurance B. Transactional products like bank FD
employer-employee group C. Shares D. Debentures
A. Statement I is true and statement ii is false
B. Statement ii is true and statement i is false 26. Which of the below statement best describes a
C. Statement I and statement ii are true “testimonial”?
D. Statement I and statement ii are false A. An endorsement from a satisfied customer
B. Test result for a product in a benchmarking test
18. The amount paid out by the insurer under a 30- C. List of test that a product must pass
year life insurance policy exceeded the sum insured D. Money required to test a product
plus revisionary bonuses. The excess is likely to
result from? 27. In a customer’s mind, there are two types of
A. charges refunded B. a frequency loading. feelings and related
C. a tax rebate D. a terminal bonus. emotions that arise with each service failure on part
of the insurance
19. As per IRDA guidelines, a _____ grace period is company. These feelings are
allowed for renewal of individual health policies? A. Confusion and empathy
A. 15 days B. 30 days C. 45 days D. 60 days B. Dishonesty and revenge
C. Ignorance and sympathy
20. The main protection need of a 19-year-old is most D. Sense of unfairness and hurt ego
likely to be
A. self-protection B. home loan protection 28. The changes in healthcare costs over recent
C. protection of dependants years has had what general impact on healthcare
D. protection of children’s future. insurance?
A. A fall in average premium levels
21. Though the duration of cover for pre- B. A reduction in underwriting requirements.
hospitalization expenses would vary from insurer to C. A rise in the need for cover
insure and is defined in the policy, the most common D. A strengthening of the insurable interest rules.
cover is for ______ pre-hospitalization
A. 15 days B. 30 days C. 45 days D. 60 days 29. The general need for a pension policy results
from the existence of what key problem?
22. Which of the following is an example of moral A. Anticipated fall in income
hazard? B. Lack of employment opportunities
A. Stunt artist dies while performing a stunt C. Likely deterioration in health
B. A person drinking copious amounts of alcohol D. Uncertainty over investment performance
because he is insured
C. Insured defaulting on premium payments
D. Proposer lies in the policy document

30. Which among the below statement is true? B. The difference in potential income and capital
I. Every pension is an annuity growth between the two products.
II. Every annuity is a pension C. The flexibility of the new product compared to the
A. I and II are true B. I and II are false old one.
C. I is true and II is false D. I is false and II is true D. The views expressed by the client.
31. Who provides public pensions? 39. What key impact will low persistency levels have
A. State B. Employers C. Insurers D. NGO’s on insurance policyholders?
A. An enhancement in product choice.
32. Which of the below statement is incorrect? B. An improvement in investment performance.
A. Variable life insurance is a temporary life C. An increase in insurance cover.
insurance policy D. A reduction in benefits.
B. Variable life insurance is a permanent life
insurance policy 40. Raju died 5 years before the end of his 30-year
C. The policy has a cash value account endowment insurance policy. What factor most likely
D. The policy provides a minimum death benefit caused the insurer to investigate the claim using the
guarantee early death claim procedures?
A. He paid the most recent premium during the
33. Health insurance is designed to handle which of period of grace.
the following risks? B. His cover was originally accepted with a premium
A. Mortality B. Morbidity C. Infinity D. Serendipity loading on medical grounds.
C. His death resulted from a recently acquired
34. Who bears the investment risk in case of ULIPs? sudden illness.
A. Insurer B. Insured C. State D. IRDA D. The policy had lapsed and was revived shortly
before he died.
35. Why is heredity history of importance in medical
underwriting? 41. A claim under a term insurance policy is
A. Rich parents have healthy kids submitted by an individual who has substantially
B. Certain diseases can be passed on from parents understated his age. As an alternative to paying out
to children the full claim the insurer is most likely to take what
C. Poor parents have malnourished kids action?
D. Family environment is a critical factor A. Deduct the underpaid premiums from the sum
insured.
36. The main purpose of including commission B. Make the policy paid up.
details in the documentation to clients is to increase C. Pay out the surrender value.
A. competitiveness B. efficiency D. Reject the claim on the grounds of
C. flexibility. D. transparency misrepresentation.
37. Which of the below statements is correct? 42. On the maturity of an endowment policy, a
A. The prime purpose of insurance regulation is to reduced sum insured is paid out. What is the most
protect the insurance companies likely reason for this?
B. The prime purpose of insurance regulation is to A. The instalments were commuted by the
protect the policyholder policyholder.
C. The prime purpose of insurance regulation is to B. The policyholder’s health seriously deteriorated
protect the insurance intermediaries during the policy term.
D. The prime purpose of insurance regulation is to C. The policy was made paid up during the policy
protect the Government term.
D. The policy was subject to a lien.
38. An insurance agent has advised a client to
surrender an existing investment product and start a 43. Proportion of policies remaining in force at the
new investment product. What key indicator should end of the period out of the total policies in force at
be used to determine whether this advice was the beginning of the period are referred to as _
ethical? A. Persistency B. Consistency
A. The best interests of the client. C. Uniformity D.. Reliability

44. During the _______period, if the policyholder has 50. Which among the following is an example of
bought a policy and does not want it, he / she can coercion?
return it and get a refund. A. Ramesh signs a contract without having
A. Free evaluation B. Free look knowledge of the fine print
C. Cancellation D.Free trial B. Ramesh threatens to kill Mahesh if he does not
45 Under what circumstances would the policyholder sign the contract
need to appoint an appointee? C. Ramesh uses his professional standing to get
A. Insured is minor B. Nominee is a minor Mahesh to sign a contract
C. Policyholder is not of sound mind D. Ramesh provides false information to get Mahesh
D. Policyholder is not married to sign a contract
46. Which of the below statement best describes the SNo Ans SNo Ans SNo Ans SNo Ans SNo Ans
concept of claim? Choose the most appropriate 1 D 11 B 21 B 31 A 41 D

option. 2 C 12 C 22 D 32 A 42 C
A. A claim is a request that the insurer should make 3 A 13 C 23 B 33 B 43 A
good the promise specified in the contract 4 C 14 C 24 C 34 B 44 B
B. A claim is a demand that the insurer should make 5 B 15 D 25 A 35 B 45 B
good the promise specified in the contract 6 A 16 D 26 A 36 D 46 B
C. A claim is a demand that the insured should make 7 B 17 D 27 D 37 B 47 C
good the commitment specified in the agreement 8 A 18 D 28 C 38 A 48 A
D. A claim is a request that the insured should make 9 D 19 B 29 A 39 D 49 B
good the promise specified in the agreement 10 D 20 A 30 C 40 D 5 B
47. Apart from conducting a comprehensive fact-find, MOCK TEST - 2

the other main action that an insurance agent can
take at outset to minimise the risk of subsequently 1. The concept of insurance involves a transfer of
receiving a customer complaint is to A. liability B. needs. C. ownership. D. risk.
A. ask for referrals B. offer commission rebates.
C. provide detailed disclosures 2. Rakesh recently bought a health insurance policy
D. register with the Insurance Ombudsman. and a personal accident policy. What main section(s)
of the insurance market do these products normally
48. An award made by the Insurance Ombudsman fall into?
will only be binding on the insurer if the A. Life insurance in both cases.
A. complainant accepts this decision B. Life insurance for health and non-life insurance for
B. Consumer Forum is involved in the case. personal accident.
C. insurer signs a disclaimer C. Non-life insurance in both cases.
D. value of the award is less than 2 lakhs. D. Non-life insurance for health and life insurance for
personal accident.
49. A policyholder asked his insurance agent for
guidance on submitting a claim for the maturity 3. The main role of an underwriter in a life insurance
benefit under his life insurance policy. Due to company is normally to
pressure of work, the agent declined to assist. A. assess the acceptability of particular risks.
Consequently, this action is deemed to be a breach B. certify a loss when claims are submitted.
of the C. design the structure of the products to be offered.
A. General Insurance Council’s guidelines. D. negotiate with the industry regulator.
B. Insurance Regulatory and Development
Authority’s Code of Conduct. 4. Akshat is a relatively cautious person. In insurance
C. Insurance Ombudsman’s protocols. terms, this will normally increase the likelihood that
D. Insurance Brokers Association of India’s he will
membership rules. A. be considered an above average insurance risk.
B. be considered a below average insurance risk.
C. require insurance cover.
D. require reinsurance cover.

5. How are perils and hazards normally distinguished A. The assignor in all cases.
under term insurance policies? B. The assignee in all cases.
A. Perils are medical factors which influence the risk C. Either the assignor or assignee depending on the
of dying and hazards are lifestyle activities which type of policy involved.
influence the risk of dying. D. The assignor and assignee jointly.
B. Perils are risks that policyholders will die before a
specified date and hazards are factors which could 12. How long is the free look-in period under a term
influence that risk. insurance policy from the date of receipt of the policy
C. Perils are factors which affect the risk being document?
insured and hazards are the size of the risk being A. 5 days. B. 10 days. C. 15 days. D. 20 days.
insured.
D. Perils are factors which could influence an insured 13. Underwriting is the process of
event occurring and hazards are the actual events A. Marketing insurance products
which will trigger a payout. B. Collecting premium from customers
6. In insurance terms, the risk of suffering a disability C. Risk collection and risk pricing
is best described as what type of risk? D. Selling various insurance products
A. Financial B. Fundamental.
C. Homogenous. D. Speculative. 14. A policy document for a money-back policy
includes the statement ‘the proposal and declaration
7. For a household insurance policy, insurable signed by the proposer form the basis of the
interest need only exist at outset and at what other contract’. In which main section of the policy
point? document will this normally appear?
A. The date the cancellation period expires. A. Attestation B. Operative clause
B. The date a claim occurs. C. Preamble D. Terms and conditions
C. The date the policy document is received.
D. The termination date. 15. A life insurance policy can only be made paid up
if what particular policy feature exists?
8. Rahul is employed by Sunny. In respect of this A. Indexing contribution B. Nomination facility.
employment, Rahul automatically has insurable C. Rider benefits D. Savings element.
interest in Sunny’s life up to what limit, if any?
A. Rahul’s monthly salary. 16. The main reason why a life insurance proposal
B. Rahul’s pension fund value. form often asks for the proposer’s height is to enable
C. Sunny’s annual profit. D. There is no limit. a reasonable comparison with the proposer’s
A. age B. gender C. occupation D. weight
9. Arun started a 20-year term insurance policy. Once
established, when, if at all, is the insurer next entitled 17. Which of the following statement/s is/are correct?
to ask him for proof of continuing good health? i. In a group health insurance, any of the individuals
A. At no point. constituting the group could anti-select against
B. After the end of the first 12 months. insurer.
C. At the point when he changes occupation or ii. Group health insurance provides coverage only to
retires. employer-employee group
D. When a lapsed policy is revived. A. Statement I is true and statement ii is false
B. Statement ii is true and statement i is false
10. The concept of indemnity is based on the key C. Statement I and statement ii are true
principle that policyholders should be prevented from D. Statement I and statement ii are false
A. insuring existing losses
B. making false insurance claims. 18. The amount paid out by the insurer under a 30-
C. paying excessively for insurance cover. year life insurance policy exceeded the sum insured
D. profiting from insurance. plus revisionary bonuses. The excess is likely to
result from?
11. Once an absolute assignment is effected under a A. charges refunded B. a frequency loading.
life insurance policy, who will be the titleholder(s) of C. a tax rebate D. a terminal bonus.
this policy?

19. As per IRDA guidelines, a _____ grace period is service failure on part of the insurance company.
allowed for renewal of individual health policies? These feelings are
A. 15 days B. 30 days C. 45 days D. 60 days A. Confusion and empathy
B. Dishonesty and revenge
20. The main protection need of a 19-year-old is most C. Ignorance and sympathy
likely to be D. Sense of unfairness and hurt ego
A. self-protection B. home loan protection
C. protection of dependants 28. The changes in healthcare costs over recent
D. protection of children’s future. years has had what general impact on healthcare
insurance?
21. Though the duration of cover for pre- A. A fall in average premium levels
hospitalization expenses would vary from insurer to B. A reduction in underwriting requirements.
insure and is defined in the policy, the most common C. A rise in the need for cover
cover is for ______ pre-hospitalization D. A strengthening of the insurable interest rules.
A. 15 days B. 30 days C. 45 days D. 60 days
29. The general need for a pension policy results
22. Which of the following is an example of moral from the existence of what key problem?
hazard? A. Anticipated fall in income
A. Stunt artist dies while performing a stunt B. Lack of employment opportunities
B. A person drinking copious amounts of alcohol C. Likely deterioration in health
because he is insured D. Uncertainty over investment performance
C. Insured defaulting on premium payments
D. Proposer lies in the policy document 30. Which among the below statement is true?
I. Every pension is an annuity
23. When is the best tim to start financial planning? II. Every annuity is a pension
A. Post retirement A. I and II are true B. I and II are false
B. As soon as one gets his first salary C. I is true and II is false D. I is false and II is true
C. After marriage 31. Who provides public pensions?
D. Only after one gets rich A. State B. Employers C. Insurers D. NGO’s
24. Which among the following is not an objective of 32. Which of the below statement is incorrect?
tax plan? A. Variable life insurance is a temporary life
A. Maximum tax benefit insurance policy
B. Reduced tax burden as a result of prudent B. Variable life insurance is a permanent life
investment insurance policy
C. Tax evasion D. Full advantage of tax breaks C. The policy has a cash value account
D. The policy provides a minimum death benefit
25. Which among the following would you guarantee
recommend on order to seek protection against
unforeseen events? 33. Health insurance is designed to handle which of
A. Insurance B. Transactional products like bank FD the following risks?
C. Shares D. Debentures A. Mortality B. Morbidity C. Infinity D. Serendipity
26. Which of the below statement best describes a 34. Who bears the investment risk in case of ULIPs?
“testimonial”? A. Insurer B. Insured C. State D. IRDA
A. An endorsement from a satisfied customer
B. Test result for a product in a benchmarking test 35. Why is heredity history of importance in medical
C. List of test that a product must pass underwriting?
D. Money required to test a product A. Rich parents have healthy kids
B. Certain diseases can be passed on from parents
27. In a customer’s mind, there are two types of to children
feelings and related emotions that arise with each C. Poor parents have malnourished kids
D. Family environment is a critical factor

36. The main purpose of including commission B. Make the policy paid up.
details in the documentation to clients is to increase C. Pay out the surrender value.
A. competitiveness B. efficiency D. Reject the claim on the grounds of
C. flexibility. D. transparency misrepresentation.
37. Which of the below statements is correct? 42. On the maturity of an endowment policy, a
A. The prime purpose of insurance regulation is to reduced sum insured is paid out. What is the most
protect the insurance companies likely reason for this?
B. The prime purpose of insurance regulation is to A. The instalments were commuted by the
protect the policyholder policyholder.
C. The prime purpose of insurance regulation is to B. The policyholder’s health seriously deteriorated
protect the insurance intermediaries during the policy term.
D. The prime purpose of insurance regulation is to C. The policy was made paid up during the policy
protect the Government term.
D. The policy was subject to a lien.
38. An insurance agent has advised a client to
surrender an existing investment product and start a 43. Proportion of policies remaining in force at the
new investment product. What key indicator should end of the period out of the total policies in force at
be used to determine whether this advice was the beginning of the period are referred to as _
ethical? A. Persistency B. Consistency
A. The best interests of the client. C. Uniformity D. Reliability
B. The difference in potential income and capital
growth between the two products. 44. During the _______period, if the policyholder has
C. The flexibility of the new product compared to the bought a policy and does not want it, he / she can
old one. return it and get a refund.
D. The views expressed by the client. A. Free evaluation B. Free look
39. What key impact will low persistency levels have C. Cancellation D.Free trial
on insurance policyholders?
A. An enhancement in product choice. 45 Under what circumstances would the policyholder
B. An improvement in investment performance. need to appoint an appointee?
C. An increase in insurance cover. A. Insured is minor B. Nominee is a minor
D. A reduction in benefits. C. Policyholder is not of sound mind
D. Policyholder is not married
40. Raju died 5 years before the end of his 30-year
endowment insurance policy. What factor most likely 46. Which of the below statement best describes the
caused the insurer to investigate the claim using the concept of claim? Choose the most appropriate
early death claim procedures? option.
A. He paid the most recent premium during the A. A claim is a request that the insurer should make
period of grace. good the promise specified in the contract
B. His cover was originally accepted with a premium B. A claim is a demand that the insurer should make
loading on medical grounds. good the promise specified in the contract
C. His death resulted from a recently acquired C. A claim is a demand that the insured should make
sudden illness. good the commitment specified in the agreement
D. The policy had lapsed and was revived shortly D. A claim is a request that the insured should make
before he died. good the promise specified in the agreement
41. A claim under a term insurance policy is 47. Apart from conducting a comprehensive fact-find,
submitted by an individual who has substantially the other main action that an insurance agent can
understated his age. As an alternative to paying out take at outset to minimise the risk of subsequently
the full claim the insurer is most likely to take what receiving a customer complaint is to
action? A. ask for referrals B. offer commission rebates.
A. Deduct the underpaid premiums from the sum C. provide detailed disclosures
insured. D. register with the Insurance Ombudsman.

48. An award made by the Insurance Ombudsman
will only be binding on the insurer if the 2) Which among the following is a secondary burden
A. complainant accepts this decision of risk?
B. Consumer Forum is involved in the case. A. Business interruption cost B. Goods damaged cost
C. insurer signs a disclaimer C. Setting aside reserves as a provision for
D. value of the award is less than 2 lakhs. meeting potential losses in the
future
49. A policyholder asked his insurance agent for D. Hospitalization costs as a result of heart attack
guidance on submitting a claim for the maturity
benefit under his life insurance policy. Due to 3) Which among the following is a method of risk
pressure of work, the agent declined to assist. transfer?
Consequently, this action is deemed to be a breach A. Bank FD B. Insurance
of the C. Equity shares D.Real estate
A. General Insurance Council’s guidelines.
B. Insurance Regulatory and Development 4) Which among the following scenarios warrants
Authority’s Code of Conduct. insurance?
C. Insurance Ombudsman’s protocols. A. The sole bread winner of a family might die
D. Insurance Brokers Association of India’s untimely
membership rules. B. A person may lose his wallet
C. Stock prices may fall drastically
50. Which among the following is an example of D. A house may lose value due to natural wear and
coercion? tear
A. Ramesh signs a contract without having
knowledge of the fine print 5) Which of the below insurance scheme is run by an
B. Ramesh threatens to kill Mahesh if he does not insurer and not sponsored by the Government?
sign the contract A. Employees State Insurance Corporatio
C. Ramesh uses his professional standing to get B. Crop Insurance Scheme
Mahesh to sign a contract C. Jan Arogya D. All of the above
D. Ramesh provides false information to get Mahesh
to sign a contract 6) How does diversification reduce risks in financial
markets?
SNo Ans SNo Ans SNo Ans SNo Ans SNo Ans A. Collecting funds from multiple sources and
1 D 11 B 21 B 31 A 41 D investing them in one place
2 C 12 C 22 D 32 A 42 C B. Investing funds across various asset classes
3 A 13 C 23 B 33 B 43 A C. Maintaining time difference between investments
4 C 14 C 24 C 34 B 44 B D. Investing in safe assets
5 B 15 D 25 A 35 B 45 B
6 A 16 D 26 A 36 D 46 B 7) Which among the following is an example of
7 B 17 D 27 D 37 B 47 C coercion?
8 A 18 D 28 C 38 A 48 A A. Ramesh signs a contract without having
9 D 19 A 29 A 39 D 49 B knowledge of the fine print
10 D 20 B 30 C 40 D 50 B B. Ramesh threatens to kill Mahesh if he does not
sign the contract
C. Ramesh uses his professional standing to get
MOCK TEST 3
Mahesh to sign a contract
D. Ramesh provides false information to get Mahesh
1) Which among the following is the regulator for the
to sign a contract
insurance industry in
India?
A. Insurance Authority of India 8) Which among the following options cannot be
insured by Ramesh?
B. Insurance Regulatory and Development
A. Ramesh’s house B. Ramesh’s spouse
Authority of India
C. Life Insurance Corporation of India C. Ramesh’s friend D. Ramesh’s parents
D. General Insurance Corporation of India
9) Which among the following would you recommend A. I and II are true B. I and II are false
in order to seek protection against unforeseen C. I is true and II is false
events? D. I is false and II is true
A. Insurance
B. Transactional products like bank FD’s 19) Health insurance is designed to handle which of
C. Shares D. Debentures the following risks?
A. Mortality B. Morbidity
10) When is the best time to start financial planning? C. Infinity D.Serendipity
A. Post retirement
B. As soon as one gets his first salary 20) Though the duration of cover for pre-
C. After marriage D. Only after one gets rich hospitalization expenses would vary from insurer to
insurer and is defined in the policy, the most common
11) Which among the following is not an objective of cover is for ______ pre hospitalization.
tax planning? A. Fifteen days B. Thirty days
A. Maximum tax benefit C. Forty Five days D. Sixty days
B. Reduced tax burden as a result of prudent
investments C. Tax evasion 21) As per IRDA guidelines, a __________ grace
D. Full advantage of tax breaks period is allowed for renewal of individual health
policies.
12) Which among the following is an intangible A. Fifteen days B. Thirty days
product? C. Forty Five days D. Sixty days
A. Car B. House C.Life insurance D. Soap
22) Underwriting is the process of ____________.
13) The premium paid for whole life insurance is A. Marketing insurance products
______________ than the B. Collecting premiums from customers
premium paid for term assurance. C. Risk selection and risk pricing
A. Higher B. Lower D. Selling various insurance products
C. Equal D. Substantially higher
23) The principle of utmost good faith in underwriting
14) Which among the following is a non-traditional life is required to be followed by ______ .
insurance product? A. The insurer B. The insured
A. Term assurance B. Universal life insurance C. Both the insurer and the insured
C. Endowment insurance D. Whole life insurance D. The medical examination
15) Which of the below statement is correct? 24) Insurable interest refers to _____________.
A. Variable life insurance is a temporary life A. Financial interest of the person in the asset to
insurance policy be insured
B. Variable life insurance is a permanent life B. The asset which is already insured
insurance policy C. Each insurer’s share of loss when more than one
C. The policy has a cash value account company covers the same loss
D. The policy provides a minimum death benefit D. The amount of the loss that can be recovered from
guarantee the insurer
16) Who provides public pension? 25) Which of the following statements about medical
A. State B. Employers underwriting is incorrect?
C. Insurers D. NGO’s A. It involves high cost in collecting and assessing
17) Who bears the investment risk in a fixed benefit medical reports.
annuity? B. Current health status and age are the key factors
A. Insurer B. Insured C. State D. Risk pool in medical underwriting
for health insurance.
18) Which among the below statement is true? C. Proposers have to undergo medical and
Statement I : Every pension is an annuity pathological investigations to assess their health risk
Statement II : Every annuity is a pension profile.

D. Percentage assessment is made on each A. Facilitate cheaper mortgage rates
component of the risk. B. Provide financial protection for home loan
borrowers
26) 1) In a group health insurance, any of the C. Protect value of the mortgaged property
individual constituting the group could anti-select D. Evade eviction in case of default
against the insurer.
2) Group health insurance provides coverage only to 33) What does a policy lapse mean?
employer-employee groups. A. Policyholder completes premium payment for a
A. Statement 1 is true and statement 2 is false policy
B. Statement 2 is true and statement 1 is false B. Policyholder discontinues premium payment
C. Statement 1 and statement 2 are true for a policy
D. Statement 1 and statement 2 are false C. Policy attains maturity
D. Policy is withdrawn from the market
27) Who among the following is not a stakeholder in
insurance claim process? 34) Who bears the investment risk in case of ULIPs?
A. Insurance company shareholders A. Insurer B. Insured C. State D. IRDAI
B. Human Resource Department
C. Regulator D. TPA 35) During the _____________ period, if the
policyholder has bought a policy and does not want it,
28) Which of the following document is maintained at he/she can return it and get a refund.
the hospital detailing all treatment done to an in- A. Free evaluation B. Free look
patient? C. Cancellation D. Free trial
A. Investigation report B. Settlement sheet
C. Case paper D. Hospital registration certificate 36) What does a first premium receipt (FPR) signify?
Choose the most appropriate option.
29) The amount of provision made for all claims in A. Free look period has ended
the books of the insurer based on the status of the B. It is evidence that the policy contract has
claims is known as ________. begun
A. Pooling B. Provisioning C. Policy cannot be cancelled now
C. Reserving D. Investing D. Policy has acquired a certain cash value
30) Which of the following documents are not 37) Under what circumstances would the policyholder
required to be submitted for Permanent Total need to appoint an appointee?
Disability claim? A. Insured is minor B. Nominee is a minor
A. Duly completed Personal Accident claim form C. Policyholder is not of sound mind
signed by the claimant. D. Policyholder is not married
B. Attested copy of First Information Report if
applicable. 38) Which of the following cases is likely to be
C.Permanent disability certificate from a civil surgeon declined or postponed by a life insurer?
or any equivalent competent doctors certifying the A. Healthy 18 year old
disability of the insured. B. An obese person
D. Fitness certificate from the treating doctor C. A person suffering from AIDS
certifying that the insured is D. Housewife with no income of her own
fit to perform his normal duties
39) Which of the following is an example of moral
31) ___ are paid upfront by Assistance Company and hazard?
later claimed from insurance company. A. Stunt artist dies while performing a stunt
A. Bail bond cases B. Personal accident claims B. A person drinking copious amounts of alcohol
C. Overseas travel insurance claims because he is insured
D. Untenable claims C. Insured defaulting on premium payments
D. Proposer lying on policy document
32) What is the objective behind Mortgage
Redemption Insurance?

40) Which is heredity history of importance in medical C. Empathy and ego drive
underwriting? D. Hunger for growth and self-confidence
A. Rich parents have healthy kids
B. Certain diseases can be passed on from 45) Proportional of policies remaining in force at the
parents to children end of the period out of the total policies in force at
C. Poor parents have malnourished kids the beginning of the period is referred to as
D. Family environment is a critical factor __________.
A. Persistency B. Consistency
41) Which of the below statement best describes the C. Uniformity D. Reliability
concept of claim?
Choose the most appropriate option. 46) Which of the below statement best describes a
A. A claim is a request that the insurer should make “testimonial”
good the promise specified in the contract A. An endorsement from a satisfied customer
B. A claim is a demand that the insurer should B. Test result for a product in a benchmarking test
make good the promise specified in the contract C. List of tests that a product must pass
C. A claim is a demand that the insured should make D. Money required to test a product
good the commitment specified in the agreement 47) What is meant by customer lifetime value?
D. A claim request that the insured should make A. Sum of costs incurred while servicing the customer
good the promise specified in the agreement over his lifetime
B. Rank given to customer based on business
42) Which of the below statement is correct? generated
A. The prime purpose of insurance regulation is to C. Sum of economic benefit that can be achieved
protect the insurance companies by building a long term
B. The prime purpose of insurance regulation is relationship with the customer
to protect the policyholder D. Maximum insurance that can be attributed to the
C. The prime purpose of insurance regulation is to customer
protect the insurance intermediaries
D. The prime purpose of insurance regulation is to 48) In a customer’s mind, there are two types of
protect the Government feelings and related emotions that arise with each
service failure on part of the insurance company.
43) Which of the below statement is incorrect? These feelings are
A. An individual insurance agent is a representative A. Confusion and empathy
of the insurance company and is governed by the B. Dishonesty and revenge
agent-principal relationship. C. Ignorance and sympathy
B. An individual insurance agent’s primary D. Sense of unfairness and hurt ego
relationship and responsibility is
to the insurance buyer and not the insurance 49) Which among the following is not an element of
company. active listening?
C. Insurance broker, who represents the insured, A. Paying good attention
generally does not have any contractual agreement B. Being extremely judgmental
to exclusively serve any one insurance company C. Empathetic listening
D. Insurance broker is expected to represent the D. Responding appropriately
customer’s interest when choosing the right product
and company that would best fit the customer’s 50) The ___________ has jurisdiction to entertain
particular needs. complaints, where value of
the goods or services and the compensation claimed
44) In 1964, Harvard Business Review published a is up to Rs. 20 lakhs.
study on “What makes a good salesman”. The author A. District Forum B. State Commission
came up with an interesting insight. They C. Zilla Parishad D. National Commission
found that a good salesman should have two basic
qualities. Which are those two qualities?
A. Affection and Zeal to succeed
B. Patience and pro-activeness

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IC-38

SECTION 2 LIFE INSURANCE

SECTION 3 HEALTH INSURANCE

Apart from insurance, other risk management

RNIS COLLEGE OF INSURANCE

4. Origins of modern insurance business can

Consumer disputes redressal agencies are

As far as insurance business is concerned, the

The Ombudsman, by mutual agreement of the

If the dispute is not settled by intermediation,

1. The ______________ has jurisdiction to

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

Insurance involves a contractual agreement in

Elements of a valid contract include:

RNIS COLLEGE OF INSURANCE

Ajay falls off a horse and breaks his back.

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

A lapse means that the policyholder

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

HEALTH SECTION The first stage of documentation is the

RNIS COLLEGE OF INSURANCE

d) Pre hospitalization expenses would be p) Corporate Frequent Travelers‟ Plan is an

RNIS COLLEGE OF INSURANCE

Underwriting is the process of risk selection

Underwriting is required to strike a proper

RNIS COLLEGE OF INSURANCE

One of the key rating parameter in insurance

Customers, who buys insurance is the primary

In Cashless claim a network hospital provides

In reimbursement claim, the customer pays

Claim intimation is the first instance of

If a fraud is suspected by insurance company

Reserving refers to the amount of provision

In case of a denial, the customer has the

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

concept of claim? Choose the most appropriate 1 D 11 B 21 B 31 A 41 D

47. Apart from conducting a comprehensive fact-find, MOCK TEST - 2

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

RNIS COLLEGE OF INSURANCE

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