irda q&a
TRANSCRIPT
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7. The amount of insurance depends on
The peril
The risk
Neither the peril nor the risk
Both the peril and the risk *
8. The amount payable under a life insurance policy depends on
The income of the insured person at the time of the claim
The income of the insured person when he took the insurance
The amount of the sum assured *
None of the above
9. State which of the following statements is correct
Risk is uniform for all assets
Life insurance improves standards of living *
Both the above statements are correct
Both the above statements are wrong
10. An insured person can afford to
Ignore safety precautions
Be less serious on the packaging of goods
Be lenient on controls in warehouses
Do none of these three *
11. Insurance works on the principle of
Sharing
Probabilities Large numbers
All of the above *
12. Insurance works on the principle of
Trust
Sharing
Randomness
All of the above *
13. Insurance works on the principle of
Mutual help *
Charity
Both of the above
Neither of the above
14. Insurance works on the principle of
Equal contributions
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Proportional contributions *
Contributions dependent on affordability
None of the above
15. Micro insurance can be transacted by
Life insurers only Non-life insurers only
Both life and non-life insurers *
Only by specially created insurers
16. State which of the following statements is correct
Risk, if certain, cannot be insured.
Risk refers to the loss that happens
Both the above statements are correct *
Both the above statements are wrong
17. A human being
Is an economic asset
Is an income earning asset
Is a perishable asset
All the above *
18. A human beings value is measured by
The income that he generates *
The value of the goods that he produces
His academic qualifications
All of the above
19. The asset, which is a human being, perishes when
He dies
He becomes disabled to work
He retires from work
In all the above situations *
20. Which of the following events are insurable in a life insurance policy?
The child to be a born is not a male child
The child, when born, has physical deformities Neither of the above situations *
Both the above situations
21. The insurer, being a trustee, has to ensure that
The claim paid is genuine
The premium charged is fair and reasonable
A suspicious claim is not paid
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All of the above *
22. An insurer, as a trustee, has to ensure that
The life fund is safe
The life fund earns the maximum interest
Both of the above * Neither of the above
23. An insurer, as a trustee, is responsible to the
The policyholders *
The IRDA
The Government
All the above
24. An insurer, as a trustee, has to give priority to
Policyholders, as a class *
An individual policyholders difficulties
The claimants financial condition
All of the above
25. The probability of 50% for an event happening means that the event
Will happen regularly every alternate occasion
Will happen 50% of the time over a very large number of trials
Will never exceed 50%, however large be the attempts made
Will become closer to 50% as the attempts increase *
26. The probability of an event is mentioned As a ratio
As a percentage
Neither as a percentage nor as a ratio
Either as a percentage or as a ratio *
27. A probability of one in a hundred is valid
When it happens once in a hundred trials
Even when the event happens fifty times in a thousand trials
When the event does not happen even once in a hundred trials
In all the above situations *
28. Insurance is legitimate
When an adverse happening is likely *
When an adverse happening is unlikely
When an adverse happening is certain
In all the above three situations
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29. Insurance covers situations
When the consequences of the happening are beneficial
When the consequences are harmful *
When the consequences are immaterial
When the consequences cannot be measured in money terms
30. Life insurance is arranged because
Some one may die
Some one may live
Of both the above reasons *
Of neither of the above reasons
31. In a life insurance contract, the beneficiary may be the
The policyholder
The life insured
The dependents of the life insured
All the three mentioned above *
32. Which one of these principles does not apply in the case of a life insurance contract?
The principle of indemnity *
The principle of good faith
The principle of insurable interest
The principle of large numbers
33. Insurance benefits
Individuals
The country The society
All the three *
34. Insurance reduces the burden on
The society
Individual families
Business houses
All the three *
35. The business of insurance has
Social implications
Impact on economic development of the country
Impact on the economic well being of families
All the above implications *
36. The business of insurance affects
Availability of capital for business *
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The life span of individuals
The safety of equipments in factories
All these three
37. The competition for the business of life insurance is
Non-life insurance Small savings
House property
None of these three *
38. The competition for the life insurance agent comes from those who canvass for
Small savings
Mutual funds
House property
All the three above *
39. Life insurance is better than other avenues of savings in respect of
Marketability
Liquidity
Transferability
All the three above *
40. Life insurance is better than other avenues of savings in respect of
Appreciation
Tax benefits
Usefulness in emergency *
All of the above
41. State which of the following statements is correct
Insurance is related to probable loss. *
Perils are avoidable
Both the above statements are correct
Both the above statements are wrong
42. State which of the following statements is correct
Premium is based on expectation of losses
Living too long is a risk Both the above statements are correct *
Both the above statements are wrong
43. State which of the following statements is correct
The strength of a wrestler can be insured
The losses are shared equally by all the policyholders
Both the above statements are correct
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Both the above statements are wrong *
44. State which of the following statements is correct
Insurance prevents the risk
Insures compensates losses in full
Both the above statements are correct Both the above statements are wrong *
45. Reinsurance is the name given to
An individual taking insurance for the second time
An insurer placing insurance with another insurer *
Both the above situations
Neither of the above situations
46 State which of the following statements is correct
Living too long is a blessing, not a risk
Living too long is a risk *
Both the above statements are correct
Both the above statements are wrong
47 State which of the following statements is correct
Perils are avoidable
Perils are not avoidable *
Both the above statements are correct
Both the above statements are wrong
48. State which of the following statements is correct
Probabilities of death and of survival are mutually exclusive
There are no substitutes for life insurance
Both the above statements are correct *
Both the above statements are wrong
CHAPTER 2
PRINCIPLES OF LIFE ASSURANCE
TEST QUESTIONS
1. Which one of the following statements is correct?
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A life insurance policy is a contract, enforceable in a court of law *
A life insurance policy is not required to be stamped
Both the statements are correct
Both the statements are wrong
2. Which one of the following statements is correct? The principle of utmost good faith applies only to life insurance
The principle of utmost good faith applies only to non-medical cases
The principle of utmost good faith is operative only for two years
All the above statements are incorrect *
3. The principle of utmost good faith is meant to protect the interests of
The insurer
The community of policyholders *
The shareholders
None of the above
4. The principle of utmost good faith is important to ensure
That the premium charged is correct
That no one gets an undue advantage
That there is no adverse selection
All the three factors mentioned above *
5. The responsibility to comply with the principle of utmost good faith rests with
The agent
The proposer *
The life to be insured All the three
6. The principle of utmost good faith does not apply to
Facts of common knowledge
Facts of law
Facts which are not material for underwriting
All the three kinds of facts mentioned above *
7. Which one of the following statements is correct?
Capacity to contract applies to both parties. Consent to the contract can b e implicit
Both the statements are correct *
Both the statements are wrong
8. Which one of the following statements is correct in life insurance?
The principle of good faith continues to operate till the policy becomes a claim
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Facts which happen after the policy has commenced, need not be reported *
Illnesses after the policy has commenced must be informed to the insurer
All the above three statements are correct.
9. A life insurance policy becomes invalid if
There is a change in occupation after the policy has commenced If the policyholder changes his residence to another country
The statements in the proposal are found to be substantially wrong *
The insured person becomes sick after issue of policy.
10. The principle of utmost good faith will operate in an existing policy
Every time the premium is paid
If the policy has lapsed and it has to be revived *
If the insured person falls sick and is admitted to hospital
If the insured person changes his job
11. If the life to be insured falls sick, that fact has to be informed to the insurer
If it happens within two years of commencement of risk
If it happens before the first premium receipt is issued *
If it happens before the policy document is issued
Only if there is a specific query from the insurer
12 Which one of the following statements is correct?
Duty to disclose applies till the claim arises in life insurance
Insurers are responsible for adverse selection
Both the statements are correct
Both the statements are wrong *
13. The existence of insurable interest is decided by
The interest which the proposer has in the asset being insured
The relationship between the proposer and the object of insurance
The legal decisions on these matters
All of the above *
14. Which of the following risks are insurable?
Speculative
Economic * Sure to happen
All of the above
15. Insurable interest is
Defined in the Insurance Act
Defined in the Contracts Act
Defined by the IRDA
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Not defined in any written law *
16. In the case of life insurance, insurable interest should exist
At the inception of the policy *
At the time of a claim
At the time of every renewal premium payment All the above occasions
17. In the case of life insurance, the principle of insurable interest operates
In the same way as in marine insurance
In the same way as in fire insurance
In the same way as in motor insurance
Differently than in other forms of insurances *
18. Which of the following statements is correct?
The principle of indemnity does not apply to life insurance policies *
The principle of indemnity does not apply to insurance on human beings
The principle of indemnity does not apply to third party motor insurances
All the above statements are wrong
19 Which one of the following statements is correct?
Declaration at the end of the proposal form has no legal sanctity
Declaration at the end of the proposal is a warranty *
Both the statements are correct
Both the statements are wrong
20. Because of the principle of indemnity, There would be difficulties in settling claims in general insurance
There are frequent disputes at the time of settling claims
There may be attempts to exaggerate the claims
All the above three may happen *
21. Which one of the following statements is correct, with reference to life insurance?
The claim payable is subject to the principle of indemnity
The claim payable will depend on the Sum Assured *
The claim payable will depend on the income of the deceased person
The claim payable will depend on the size of the family left behind
22. Which one of the following statements is correct, with reference to life insurance?
The claim can be paid only after verification of the income of the deceased person
The claim amount should not exceed the loss of income to the family
The claim amount payable should be determined by a surveyor.
None of the above statements is true *
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23. An insurance contract is valid because
It is not a wagering contract *
It promotes socially desirable causes
It takes care of the destitute
It provides Government with large funds
24. Retention of risk may be done conveniently by Large corporations *
Small companies
Single individuals
None of the three
25. In the case of life insurance, the risks
Can be avoided
Cannot be avoided *
Are avoidable through medical science
Are avoidable through proper food habits
26. Which one of the following statements is correct?
It is difficult to accurately value a human life.
It is possible to reasonably estimate the value of a human life.
Both the statements are correct *
Both the statements are wrong
27. Which one of the following statements is correct?
The needs of people are different
The needs of people vary according to life styles
The needs of people depend on their upbringing All the three statements are correct *
28. Which one of the following statements is correct?
A person who has just retired from a lucrative job may not need life insurance
A person who has spent twenty years in Dubai may not need life insurance
A person who has just taken up his first job needs life insurance *
All the above statements are wrong
29. Which is the right time for taking life insurance?
When you are about to get married
Soon after you have got married
Just when you are joined a new job
All the three times are right *
30. Which one of the following statements is correct?
A person whose children are well settled does not need life insurance
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A person who has no family does not need life insurance
Both these statements are correct
Both these statements are wrong *
31. Which one of the following statements is correct?
Life insurance helps when one wants to take a loan for a house Life insurance helps one to retire a comfortable retired life
Both these statements are correct *
Both these statements are wrong
32. In which of the following situations will a life insurance policy come in handy?
When you want to set up an independent business
When you want to buy a new house
In neither of the above situations
In both the above situations *
33. Which one of the following statements is correct?
People hesitate to buy life insurance because they are not aware of their needs
People hesitate to buy life insurance because they prefer to enjoy the present
Both the statements are correct *
Both the statements are wrong
34. Which one of the following statements is correct?
A person with an established business does not need life insurance
Life insurance is necessary to save income tax
Both the above statements are correct
Both the above statements are wrong *
35. Which of the following needs can be met though life insurance?
Providing for family in the event of sudden death
To lead a comfortable life in ones old age
Completing ones investment plans
All the above *
36. Which one of the following statements is correct?
Many people think that they do not need life insurance
Many people think that there is no hurry to buy life insurance Both the above statements are correct *
Both the above statements are wrong
37. Which one of the following statements is correct?
Life insurance helps people to get loans for car or house
Life insurance helps policyholders to save income tax
Both the above statements are correct *
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Both the above statements are wrong
38. Which one of the following statements is correct?
People do not see the need for life insurance as top priority
People are unwilling to set aside immediate pleasures to secure life insurance
Both the above statements are correct * Both the above statements are wrong
39. Which one of the following statements is correct?
Term insurance policies are suitable for elderly adults
A nominee must have insurable interest in the life insured
Both the statements are correct
Both the statements are wrong *
40. Which one of the following statements is correct?
Retention of risk is an alternative to insurance
Insurable interest exists between partners
Both the statements are correct *
Both the statements are wrong
Workbook
1. A town has 4000 houses. Experience of past ten years shows that over a period ofone year, one in every thousand houses gets burnt by fire. If the expected loss is
Rs.2,00,000 per house, what would be annual premium to cover each house ?
a) Rs.200 * b) Rs.300 c) Rs.400 d) none of these
.2 10 persons are expected to die in a year out of a group of 10,000 persons aged 50,
who are normal healthy lives. If each persons family is to be given a sum ofRs.1,00,000 as death claim amount, what would be the share of each person
towards this loss.
a) 100 * b) 150 c) 250 d) 200
.3 There are ten thousand employees aged 50 and have similar prospects of
longevity. Experience shows that over a period of one year, ten persons out ofthousand persons die. If the economic value of a deceased person is assumed to be
Rs.50,000/-, what would be the share of loss of each person.
a) 500 * b) 1000 c) 750 d) 1500
CHAPTER 3
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PREMIUMS AND BONUSESPREMIUM CALCULATION
20 The following illustrations are based on certain assumptions with regard to practices
of insurers. These assumptions are specified at the appropriate places. While makingcalculations for any policy, the practices of that insurer must be conformed to.
Step 1: Find out tabular premium i.e. premium quoted in published premiumrates, for given age (nearer, next or last birthday as the case may be) for the
relevant plan and term. This premium is usually stated as Rs. per thousand SA.
Assume that the figure is Rs. 45.60
Step 2 : Deduct adjustment for large sum assured, if applicable. Assuming that
the insurer allows rebates as follows
Sum Assured Rebate per thousand S.A
Rs.25,000 Rs.49,999 Re.1/-Rs.50,000 Rs.99,999 Re.1.50/-
Rs.1,00,000 and over Rs. 2/-
and that this is a policy for Rs.75000 SA, the premium would be Rs. 44.10 (45.60
less 1.50)
Step 3 : Make adjustment for mode of payment of premium. Assuming that the
insurer provides rebates of 1% for yearly mode and that the mode proposed in this
case is yearly, the premium would decrease by 1% of 44.10 or Rs.0.44, makingthe premium Rs. 43.66
Step 4 : Add Extras. Assuming that the Extras in this case are Rs.1.50 per
thousand for occupational hazard and Rs.2 per thousand for supplementarybenefits, the total addition is Rs. 3.50 making the total premium Rs. 47.16
Step 5 : Multiply by SA (Rs.47.16 X 75) equals Rs. 3537.00
NOTE: If the adjustment of 1% for mode is made before the adjustment for SA,
the deduction would have been 0.46, instead of 0.44. The difference can be
significant, if the insurance is for a large SA. Insurers would clarify how theywant it to be done
21 The above calculation was made for yearly mode of premium. Therefore, the figure of3537 is the premium to be charged. If however, the mode was quarterly, then the annual
premium worked out by the above method, without the rebate of 1% for yearly mode,
will have to be divided by 4 to determine the quarterly instalment premium.
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22 In the calculation shown in the earlier paragraph, the final figure arrived at has no
paise. If there are paise in the final figure, they may be (i) ignored or (ii) rounded off to
the next higher integer, or (iii) rounded off to the nearest integer or (iv) rounded off to thenearest 50 paise or any other adjustment, as the insurer may practice.
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23 A few examples are given below
Plan term S.A. Age Mode Other riders
1. 14-30 Rs.25,000/- 35 Hly DAB + EPDB
2. 5-35 Rs.50,000/- 30 Yly Health extra Rs.3%3. 75-20 Rs.30,000/- 30 Mly (SSS) DAB + EPDB
NOTE : DAB stands for Double Accident Benefit and EPDB stands for Extended
Permanent Disability Benefit. Most insurers combine these two benefits together
1. Tabular premium is Rs.36.55 (1)
Less adjustment(a) for * SA 1.00 - (2)
(b) for Hly mode 1.5% 0.55
Balance Rs.35.00 - (3) (per thousand SA.)
=======
Balance x SA = 35 x 25 = Rs.875.00 - (4)
Add DAB + EPDB + 25.00 - (5)Rs.900.00 - (6)
Half yearly premium Rs.450.00 - (7)
2. Tabular premium Rs.28.40
Rebate for large SA Rs. 1.50Adjustment for Qtly. Mode nil
Balance Rs.26.90Balance x SA. In thousands
i.e.26.90 x 50 = 1345.00Add : health extra Rs.3 x 50 150.00
----------
1495.00
Quarterly instalment premium Rs.373.75
3. Tabular premium Rs. 66.80
Less adjustment for SA 1.00
------------Adjustment for mode nil Rs. 65.80
=======
Annual premium 65.80 x 30 = Rs.1974
Add for DAB + EPDB + 60----------
Rs.2034
Monthly instalment premium
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(SSS) (divide by 12) Rs. 169.05
i.e. Rs.169.00
TEST QUESTIONS
1. Which one of the following statements is correct?
The premium is the price paid by the policyholder to secure insurance
The amount of premium varies according to the insurance plan
Both the above statements are correct *
Both the above statements are wrong
2. Which one of the following statements is correct?
The premium under a life insurance policy may be paid monthly
The premium under a life insurance policy may be paid annually
Both the above statements are correct *
Both the above statements are wrong
3. Which one of the following statements is correct?
The sum of all the premiums paid will be equal to the Sum Assured
The sum of all the premiums paid will be more than the Sum Assured
Both the above statements are correct
Both the above statements are wrong *
4. Which one of the following statements is correct?
The sum of all the premiums paid will be more than the Sum Assured
The sum of all the premiums paid will be less than the Sum Assured Both the above statements are wrong *
Both the above statements are correct
5. Which one of the following statements is correct?
The annual premium must be twelve times the monthly premium
The annual premium may be less than twelve times the monthly premium *
Both the above statements are wrong
Both the above statements are correct
6. Which of the following statements is correct?
The annual premium is equal to the SA divided by the term of the policy The annual premium increases as the term of the policy increases
Both the above statements are correct
Both the above statements are wrong *
7. Which one of the following statements is correct?
The annual premium for a long term policy is more than for a short term policy
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The annual premium for a long term policy is less than for a short term policy *
Both the above statements are wrong
Both the above statements are correct
8. Which one of the following statements is correct?
The premium increases as age of the insured person increases *
The premium decreases as the age of the insured person increases
The premium is the same whatever be the age of the person
The premium is the same for a person aged 30 for all plans of insurance
9. Which one of the following statements is incorrect?
The premium depends on the age of the policyholder *
The premium depends on the age of the insured person
The premium depends on the health of the insured person
The premium depends on the occupation of the insured person
10. What does a premium depend upon?
Age of the person to be insured
Family history of the person to be insured
Medical history of the person to be insured
All of the above *
11. What does a premium depend upon?
Religion of the person to be insured
Income of the person to be insured Both the religion and the income of the person to be insured
Neither the religion nor the income of the person to be insured *
12. The premium actually paid by the policyholder depends upon
The wealth of the person to be insured
The level of risk as assessed by the insurer *
The tables of rates printed by the insurer
None of the above
13. What does a premium depend upon?
The place of worship visited by the person to be insured
The state of health of the policyholder
The decision of the underwriter *
The report of the agent
14. Which one of the following statements is correct?
The rate of premium charged can be less than the tabular rates
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The rate of premium can be more than the tabular rates *
Both the above statements are correct
Both the above statements are wrong
15. Which one of the following statements is correct?
The premium collected in the early years is less than what is required
The premium collected in the early years is more than what is required *
The premium collected in any year is exactly what is required
All the above statements are correct
16. The pure premium will be
Less than the office premium *
More than the office premium
Either more or less than the office premium
Neither more nor less than the office premium
17. The net premium will be
Less than the risk premium *
More than the risk premium
Calculated by adding expenses to the risk premium
More than the pure premium
18. When interest rates fall, the premium charged by an insurer are likely to
Increase *
Decrease Remain the same
Neither increase or decrease
19. The premium is loaded because of
Interest likely to be earned
Likely expenses *
Likely claims
Age of the insured person
20. The policyholder is concerned with the
Office premium *
Pure premium
Net premium
Risk premium
21. The premium rates printed in the promotional literature are
Risk premiums
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Net premiums
Office premiums *
None of the above
22. The premium printed on the schedule of the policy is worked out from Net premiums
Risk premiums
Office premiums *
None of the above
23. The reason for charging level premiums is
Risk increases as age increases
It is convenient to the policyholder
It is convenient to the insurer
All the above reasons *
24. The practice of charging level premiums
Makes it convenient to the policyholder
Reduces the likelihood of lapses
Adds to the reserves of the insurer
Has all the above benefits *
25. The practice of charging level premiums has the benefit of
Making it easy for the policyholder to maintain the insurance cover *
Increasing the returns to the policyholder
Helping the agent in his sales effort All the above
26. Adjustments are made to the tabular premiums because of
The health of the person insured
The frequency of premium payment
The occupation of the person insured
All of the above *
27. Which one of the following statements is correct?
All insurers charge same premium rates.
Premium rates are determined by the IRDA
Premium rates are determined by the actuaries of insurers *
All of the above statements are correct
28. Which one of the following statements is correct?
The age next birthday is always higher than the age nearest birthday
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The age next birthday may be sometimes less than the age nearest birthday
Both the above statements are correct
Both the above statements are wrong *
29. Which one of the following statements is correct?
The premium calculated on mortality alone is called risk premium Insurers collect premium in advance
Both the statements are correct *
Both the statements are wrong
30. Which one of the following statements is correct?
The age last birthday can never be the same as the age nearest birthday
The age last birthday is always less than the age next birthday *
Both the above statements are correct
Both the above statements are wrong
31. Which one of the following statements is correct?
The age nearest birthday is always less than the age next birthday
The age nearest birthday is always more than the age last birthday
Both the above statements are correct
Both the above statements are wrong. *
32. In life insurance, profit is determined by
The accountant who prepares the balance sheet
The actuary who makes a valuation *
The auditor who certifies the annual accounts
None of the above three persons
33. In the business of life insurance, valuation means
An actuarial exercise to determine adequacy of funds *
An attempt to determine the correctness of the values of assets
Estimating the values of immovable property
All of the above
34. The addition to the life fund in a year represents
The profits made by the insurer in that year
The moneys set aside by the insurer for the policyholders * The extra premium charged by the insurer to its policyholders
All of the above
35. The addition to the life fund arises because of the
Loading in the premium for bonus
The practice of charging level premiums *
Not having paid the claims on time
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All the above reasons
36. A valuation is done by a life insurer because
It is a statutory requirement
It is necessary to be able to declare dividends to shareholders
It tells the insurer how well it is managing the business All of the above *
37. The surplus in the life fund represents
The profits of the business
The excess premium collected by the insurer
The dues to the shareholders
None of the above *
38. The surplus disclosed in a valuation means
That the interests of the policyholders are safe
That the funds of the insurer are adequate to meet its liabilities
That the business is being managed well
All of the above *
39. Which one of the following statements is correct?
The life fund belongs to the policyholders *
The life fund belongs to the shareholders
Both the statements above are correct
Both the statements above are wrong
40. Which one of the following statements is correct? In a valuation, the actuary calculates the fund that the insurer must have
In a valuation, the actuary calculates what the liability of the insurer is
Both the statements above are correct *
Both the statements above are wrong.
41. Which one of the following statements is correct?
Bonus is declared out of the surplus declared by the actuary *
The S.A is automatically increased when a bonus is declared
All bonuses are reversionary bonuses
All the statements above are correct
42. Which one of the following statements is correct?
The bonus declared is uniformly applicable to all plans of insurance
Bonus may vary between plans *
Both the statements above are correct
Both the statements above are wrong
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43. The minimum percentage of the surplus to be set aside for policyholders is
Ninety five
Ninety *
Eightyfive
Nil (there is no minimum)
44. For what period is an interim bonus valid?
For as long as the policy is in force
Till the next declaration of bonus *
Till the next valuation date
As long as the management wants it to be
45. Which one of the following statements is correct?
Bonus is paid along with the survival benefit in a money back policy
Bonus is paid when the money back policy matures *
Both the statements above are wrong
Both the statements above are correct.
46. A bonus becomes possible because
Actual experience is better than expectations
The assumptions made in constructing the premium were conservative
There is a loading for bonus in the premium
Of all the above reasons *
47. What does a surplus in the life fund signify?
That the premium rates must be revised downwards
That the premium rates are appropriate That the company is too miserly in expenditure
None of the above three *
48. When a certain level of bonus is declared, what does it mean?
That this level will be maintained in future years
That it is the return on ones investment, viz., premium
Both the above meanings can be made
Both the above meanings will be wrong *
WORK BOOK
1. Given the following data.
Tabular premium Rs. 55 No rebate for mode. Rebate for SA above Rs. 50000 Rs.2.00 per thousand. DAB @ Rs. 1.50 per thousand. DAB granted upto Rs.
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8,00,000 only. Occupation extra Rs. 2.50 per thousand, what would be the half
yearly premium for SA Rs. 1,50,000.
(a) 4025 * (b) 4175 (c) 4250 (d) 4350
2. On the basis of the following dataS.A. Rs. 1,00,000/- tabular premium.. Rs. 33.10
Rebate R. 2/- per thousand for yearly mode. Re 1/- for half yearly, none for
quarterly.Rebate Rs. 3/- per thousand for Rs. 1,00,000 and above.
DAB Re. 1/- per thousand
Occupation extra Rs. 4/- per thousand.
Calculate the yearly premium for Rs 1 lakh SA.
(a) 2810 (b) 3110 (c) 3310 * (d) 3360
3. Calculate quarterly premium (rounded off to the next higher rupee) on the basisof the following data.
S.A Rs. 50,000/- , Date of maturity Rs. 24.12.2036.- Term 30 years.Date of birth 28.06.1979., mode rebate yly Rs 1.50 per thousand, hly Rs. 1.00,
quarterly, nil and monthly 5 % extra. SA. rebate Rs. 1.50 per thousand for Rs.
50,000/- and above.
Tabular premium. For age nearer birthday 26 Rs. 26.4627 Rs. 27.08
28 Rs. 28.15
(a) 312 (b) 320 * (c) 331 (d) 339
4. Calculate half yearly premium on the basis of the following data
Date of birth 28.06.1978. Date of maturity 24.12.2041., SA Rs 1,00,000/- , term35 years. Tabular premium for age next birthday- age 27 Rs. 27.46, for age 28,
Rs. 27.83 and for age 29, Rs. 28.37. Rebate 5 % extra for monthly, less Rs. 1/- for
hly Rs. 1.50 for yearly, SA Rs. 1.50 for SA Rs. 50000/- and above.
(a) 1266.50 (b) 1267 (c) 1293.50 * (d) 1294
5. Calculate monthly premium (rounded off to next higher rupee)S.A Rs 60,000/-, endowment 39 years, date of maturity 28.09.2045, large sum
assured rebate Rs. 1.50 for Rs. 50,000 and above. Dat ofbBirth 26.12.1976
Premium per thousand SA For age next birthday 29 Rs 27.4630 Rs 28.83
31 Rs 29.37
(a) 139 (b) 140 * (c) 141 (d) 142
6. Calculate monthly premium (rounded off to next higher fifty paise)
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S.A Rs. 30,000/- with DAB for Rs. 1/- per thousand and occupational extra of Rs.
1.75 per thousand. Date of Birth 21.10.1980 5% extra for monthly mode of
payment. Tabular premium Rs. 32.81
(a) 93,00 (b) 93.50 * (c) 94.00 (d) 94.50
7. A proposal for SA of Rs. 10 lakhs with DAB for monthly mode under SSS.
Proposer had a previous policy of Rs. 5 lakhs with DAB. Proposal was accepted
with health extra of Rs. 2.75 per thousand SA premium for DAB Re 1 perthousand 5% extra for monthly mode large SA rebate of Rs. 2/- per thousand for
1 lakh and above . Tabular premium Rs. 48.20 maximum total SA. on which
DAB is allowed is Rs. 10/- lakhs.
Find monthly premium, rounded off to the next higher rupee
(A) 4102 (B) 4121 * (C) 4183 (D) 4195
8. A policy for Rs.12 lakhs taken on 14.7.2007 under endowment plan for 20 years
with DAB. Date of Birth is 12.11.1980. Proposal is accepted with [email protected] per thousand (maximum Rs.10 lakhs) and occupational extra of Rs.2.75
per thousand. No rebates for high SA However for yearlymode a rebate of Rs. 2
is given. Calculate yearly premium
Tabular premium for age nearer birthday, as follows :
Age 25 - Rs.48.20Age 26 - Rs.48.40
Age 27 - Rs 49.10
Age 28 - Rs.49.80
(a) 60480 (b) 60980 (c) 61080 * (d) 61380
9. Given the following information, indicate which of the four options given below would
be the correct half-yearly premium for an endowment policy for rs. 1 lakh, on the life of a
person born on 28.6.1974.
Term 35 years
Date of maturity 24.12.2037
Tabular premium for age nearest birthday 27 - Rs.27.46 per thousand
Tabular premium for age nearest birthday 28 - Rs.27.83 per thousandTabular premium for age nearest birthday 29 - Rs.28.37 per thousand
Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly modeand Rs. 1.50 less for yearly mode
S.A. rebate Rs. 1.50 less for Rs. 50000 and above
Options
1266.50 *
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1246.50
1293.50
None of the above
10. Given the following information, indicate which of the four options given below
would be the correct premium to be deducted from the salary of a person born on28.6.1974, who has taken an endowment policy on his life.
Sum assured Rs. 40000Term 35 years
Date of maturity 24.12.2037
Tabular premium for age nearest birthday 27 - Rs.27.46 per thousandTabular premium for age nearest birthday 28 - Rs.27.83 per thousand
Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand
Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly modeand Rs. 1.50 less for yearly mode
SA. Rebate Rs. 1.50 less for Rs. 50000 and above
Options
87.77 *
89.57
97.41
None of the above
11. . Given the following information, indicate which of the four options given below
would be the correct annual premium (rounded off to the nearest rupee) for an
endowment policy on the life of a person born on 28.6.1974.
Sum assured Rs. 50000
Policy taken on 3rd March 2003, to be back dated by three months
Tabular premium for age nearest birthday 27 - Rs.27.46 per thousandTabular premium for age nearest birthday 28 - Rs.27.83 per thousand
Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand
Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode
and Rs. 1.50 less for yearly modeSA. Rebate Rs. 1.50 less for Rs. 50000 and above
Options
1241.00
1241.50
1242.00 *
None of the above
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12. . Given the following information, indicate which of the four options given below
shows the monthly premium (rounded off to the nearest rupee) to be paid by a personborn on 28.6.1974, who has taken an endowment policy on his life.
Sum Assured Rs. 40000Term 35 years
Date of maturity 24.12.2037
Tabular premium for age nearest birthday 27 - Rs.27.46 per thousandTabular premium for age nearest birthday 28 - Rs.27.83 per thousand
Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand
Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode
and Rs. 1.50 less for yearly modeSA. Rebate Rs. 1.50 less for Rs. 50000 and above
Options
97.00 * 97.40
97.50
None of the above
CHAPTER 4
LIFE INSURANCE PRODUCTS
TEST QUESTIONS
1. A plan of insurance is said to be different from another if
The sum assured is different
The age of the life to be insured is different
The date of commencement of policy is different
The conditions when the sum assured becomes payable are different *
2. A plan of insurance is said to be different from another if
The mode of payment of premium is different The amount of premium is different
The conditions for payment of sum assured are different *
The date of maturity is different
3. A plan of insurance is said to be different from another if
The date of maturity is different
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The date of commencement of risk is different
The underwriter decides to charge extra premium in one case
The conditions when the sum assured becomes payable are different *
4. Which one of the following statements is correct?
Every plan of insurance is a combination of two basic plans * The name given to a plan indicates the benefits available under the plan
Both the statements above are correct
Both the statement s above are wrong
5. Which one of the following statements is correct?
Plans of insurance can be compared by reading the names given to the plans
Plans of insurance can be compared by comparing the premium rates
Both the statements above are correct
Both the statements above are wrong *
6. Which one of the following statements is correct?
A whole life plan is basically a term insurance plan *
A money back plan is basically a pure endowment plan
Both the statements above are correct
Both the statements above are wrong
7. Which one of the following statements is correct?
A marriage endowment policy is taken on the life of ones daughter
A childrens deferred insurance policy is taken on the life of ones child *
Both the statements above are correct
Both the statements above are wrong
8. Which one of the following statements is correct?
A marriage endowment policy insures the father and daughter together
A term insurance plan can be for a long period *
Both the statements above are correct
Both the statements above are wrong
9. Which one of the following statements is correct?
The sum assured under some policies increase every year
The sum assured under some policies reduce every year
Both the statements above are correct *
Both the statements above are wrong
10. Which one of the following statements is incorrect?
The SA payable on death can be more than the SA payable on maturity
The SA payable on maturity can be more than the SA payable on death
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Both the statements above are correct *
Both the statement above are wrong
11. Which one of the following statements is correct?
The SA is always payable immediately on death or survival
The SA payable on death may be paid long after the death of the insured * Both the statements above are correct
Both the statements above are wrong
12. Which one of the following statements is correct?
The SA is always payable in a lump sum
The SA is always payable in instalments
The SA is always payable in a lump sum unless asked for otherwise
All the statements above are wrong *
13. Which one of the following statements is correct?
There is no difference between a term assurance plan and a Whole Life plan
A Whole Life plan is a term assurance plan with an indefinite term *
Both the statements above are wrong
Both the statements above are correct
14. Which one of the following statements is correct?
In a limited payment policy, there is a maximum limit to the SA
In a limited payment policy, there is a maximum limit to the term
Both the statements above are wrong *
Both the statements above are correct
15. Which one of the following statements is correct?
In a limited payment policy, the premium is paid as long as the policy is in force.
In a limited payment policy, the premium stops before the end of the term *
Both the statements above are correct
Both the statements above are wrong
16. For the same age and SA, the premium under an ordinary Whole Life policy
Will be more than in a limited payment Whole Life policy
Will be less than in a limited payment Whole Life policy *
Will be the same as in a limited payment Whole Life policy
Can be more, less or the same as in a limited payment Whole Life policy
17. For the same age, SA and term, the premium under an Endowment policy
Will be the same as in a limited payment Endowment policy
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Will be more than in a limited payment Endowment policy
Will be less than in a limited payment Endowment policy *
Can be same, more or less than in a limited payment Endowment policy
18. For the same age and benefits, the premium under a limited payment policy
Will be more than in a non-limited plan * Will be less than in non-limited plan
Will be the same as in a non-limited plan
May be more, less or same as in a non-limited plan
19. Limited payment plan policies may be preferred by persons
Whose careers are likely to be short *
Who are young and have just started their careers
Who have large families
Who are very wealthy
20. Limited payment plan policies may be preferred by persons
Who are not first class lives
Who are in their best of health
Who careers have just begun
Who do not expect to be in active employment for long *
21. Which one of the following statements is correct?
The educational annuity policy is an annuity policy
The educational annuity policy is meant for persons having young children
Both the statements above are wrong *
Both the statements above are correct
22. Which one of the following statements is correct?
Any policy which promises a payment on a fixed date is an Endowment policy
If the SA increases every year, it is a participating policy
Both the statements above are correct
Both the statements above are wrong *
23. Which one of the following statements is correct?
Only participating policies are entitled to the benefit of bonus *
A bonus is the return of additional premium paid by a participating policy
Both the statements above are correct
Both the statements above are wrong
24. Which one of the following statements is correct?
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In a convertible plan, the insurer can refuse the conversion on medical grounds
In a convertible plan, the conversion is done on the request of the policyholder *
Both the statements above are correct
Both the statements above are wrong
25. Which one of the following statements is correct? Convertible plans allow whole life plans to be altered to endowment plans *
The option of conversion can be exercised whenever the policyholder chooses to
Both the statements above are wrong
Both the statements above are correct
26. Which one of the following statements is correct?
If the option of conversion is not exercised, the policy will come to an end
If the option of conversion is not exercised, the policy will continue as before *
Both the statements above are wrong
Both the statements above are correct
27. Which one of the following statements is correct?
A conversion becomes effective when the policyholder exercises the option *
A conversion option is subject to the insured person being in good health
Both the statements above are wrong
Both the statements above are correct
28. Which one of the following statements is correct?
Convertible plan policies do not participate in bonuses
Money back policies are not convertible plan policies *
Both the statements above are correct Both the statements above are wrong
29. Which one of the following statements is correct?
A joint life policy may cover two brothers under one policy
A joint life policy may cover a married couple under one policy *
Both the above statements are wrong
Both the statements above are correct
30. Which one of the following statements is correct?
A joint life policy may cover partners in business under one policy
A joint life policy may cover a married couple under one policy
Both the above statements are wrong
Both the statements above are correct *
31. Which one of the following statements is correct?
The premium of a joint life policy depends on the age of the older person
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The bonus on a joint life policy is calculated on double the SA
Both the statements above are wrong *
Both the statements above are correct
32. Which one of the following statements is correct?
Double endowment policy has no maturity benefit The bonus on a joint life policy is calculated on double the SA
Both the statements above are correct
Both the statements above are wrong *
33. Which one of the following statements is correct with regard to joint life policies?
The premium is the total of the premiums for insuring the two persons separately
The premium will be less than the cost for insuring the two persons separately *
Both the above statements are wrong
Both the above statements are correct
34. Which one of the following statements is true with regard to Childrens policies?
They insure minor children *
They insure only school going children
Both the above statements are correct
Both the above statements are wrong
35 Which one of the following statements is true with regard to Childrens policies?
Risk cover begins on or after vesting date
Risk cover begins immediately after the policy commences
Both the statements above are wrong *
Both the above statements are correct
36. Which one of the following statements is true with regard to Childrens policies?
The insured child becomes the owner of the policy on vesting date *
The insured child becomes the holder of the policy only when it is assigned
Both the above statements are wrong
Both the above statements are correct
37. Which one of the following statements is true with regard to Childrens policies?
The deferred date is a policy anniversary
The vesting date is a policy anniversary
Both the above statements are correct *
Both the above statements are wrong
38. Which one of the following statements is true with regard to Childrens policies?
The policy vests at age 18 last birthday *
The policy vests at age 18 next birthday
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The policy vests at age 18 nearest birthday
All the statements above are correct
39. Which one of the following statements is true with regard to Childrens policies?
Risk will commence on deferred date automatically *
Risk will commence on deferred date after satisfactory medical examination Risk will commence on deferred date with enhanced premium
All the statements above are wrong
40. Which one of the following statements is true with regard to Childrens policies?
On the deferred date, the insured child has to be at least 15 years old
On the deferred date, the insured child need not be a major *
On the deferred date, the policy must have been in force for at least ten years
All the statements above are wrong
41. Which one of the following statements is true with regard to Childrens policies?
An assignment has to be done on the deferred date
An assignment has to be done on the vesting date
Both the above statements are correct
Both the above statements are wrong *
42. Which one of the following statements is true with regard to Childrens policies?
The ownership of the policy changes on the deferred date
The ownership of the policy changes on the vesting date *
Both the above statements are wrong
Both the above statements are correct.
43. Which one of the following statements is true with regard to Childrens policies?
On vesting, the insured person has an option to change the term of the policy
On vesting the insured person has an option to increase the SA
Both the statements above are wrong *
Both the statements above are correct
44. Which one of the following statements is correct?
A money back type of policy is a variable insurance policy
A convertible policy is a variable insurance policy
Both the statements above are correct
Both the statements above are wrong *
45. Which one of the following statements is correct?
A variable insurance plan combines an insurance plan with an investment plan *
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A variable insurance policy guarantees a return or yield
Both the statements above are correct
Both the statements above are wrong
46. Which one of the following statements is correct?
A variable insurance plan is good when investment conditions are favourable A variable insurance plan is good when the stock market is booming
Both the statements above are correct *
Both the statements above are wrong
47. Which one of the following statements is correct?
Industrial assurance is meant only for industrial workers
Industrial assurance is meant for people with low incomes *
Both the statements above are correct
Both the statements above are wrong
48. Which one of the following statements is correct?
A salary savings scheme policy is an industrial assurance plan
A salary savings scheme policy can be taken for a SA of Rs.10 lakh *
Both the statements above are correct
Both the statements above are wrong
49. Which one of the following statements is correct?
In industrial assurance the lapse rates tend to be high. *
In salary savings scheme policies, the lapse rates tend to be high
Both the statements above are correct
Both the statements above are wrong
50. Which one of the following statements is correct?
In industrial assurance plans, the premium is deducted from the pay roll
In salary savings scheme plans, the premium is deducted from the pay roll *
Both the statements above are correct
Both the statements above are wrong
51. Who is benefited if a policy is under the salary savings scheme?
The policyholder
The insurer The agent
All the three above *
52. Which one of the following statements is correct?
The premium under a SSS policy is paid monthly
The premium under a SSS policy is one twelfth the annual premium
Both the statements above are correct *
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Both the statements above are wrong
53. Which one of the following statements is correct?
In a SSS policy, the policyholder has to ensure that premium is paid *
In a SSS policy, the responsibility to pay premium is with the employer
Both the statements above are correct Both the statements above are wrong
54. Which one of the following statements is correct?
In life insurance, the word rider means the person taking part in horse races
In life insurance, the word rider refers to additional clauses *
Both the statements above are correct
Both the statements above are wrong
55. Which one of the following statements is correct?
A rider modifies an existing condition in the policy
A rider supplements or adds to an existing condition in the policy *
Both the statements above are correct
Both the statements above are wrong
56. Which one of the following statements is correct?
Riders provide supplementary benefits to the basic plan *
No rider is allowed unless the underwriter agrees to the same
Both the statements above are correct.
Both the statements above are wrong.
57. Which one of the following statements is correct? A premium waiver option is allowed as a rider *
The premium on all riders depend on the age of the insured person
Both the statements above are correct
Both the statements above are wrong
58. Which one of the following statements is correct?
The premium on a rider varies according to the basic plan
The premium on riders cannot exceed specified limits of the basic premium *
Both the statements above are correct
Both the statements above are wrong
59. Which one of the following statements is correct?
There is no death risk cover in an annuity
Though called an annuity, the payments may be paid every month
Both the statements above are correct *
Both the statements above are wrong
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60. Which one of the following statements is correct?
An annuity is paid only to the person who takes out the annuity policy
An annuity is paid only till the death of the person taking out the annuity policy
Both the statements above are correct
Both the statements above are wrong *
61. Which one of the following statements is correct?
An annuity policy guarantees a pension *
An annuity policy is issued only after a medical examination
Both the statements above are correct
Both the statements above are wrong
62. Which one of the following statements is correct?
Under an annuity certain policy, the annuity stops after the certain period
Under a deferred annuity policy, the annuity commences immediately
Both the statements above are correct
Both the statements above are wrong *
63. Which one of the following statements is correct?
An annuity can be taken only on a single life
In a life annuity, the risk of death is covered
Both the statements above are correct
Both the statements above are wrong *
64. Which one of the following statements is correct?
In a deferred annuity policy, the premium has to be paid in a lump sum
Annuities purchased during different years may all commence on the same date * Both the statements above are correct
Both the statements above are wrong
66. Which one of the following statements is correct?
Physically handicapped persons may be given annuities at ordinary rates
The amount of annuity depends on the age at which the annuity commences
Both the statements above are correct *
Both the statements above are wrong
66. State which one of the following statements is correct?
In group insurance, a single policy is issued covering many persons *
A master policy covers servants of a master
Both the statements above are correct
Both the statements above are wrong
67. State which one of the following statements is correct?
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In group insurance, there is only one proposal to insure many
In group insurance, there is only one policy covering many
Both the statements above are correct *
Both the statements above are wrong
68. State which one of the following statements is correct? In group insurance, the proposal is made by the employer *
In group insurance proposals are made by each of the insured
Both the statements above are correct
Both the statements above are wrong
69 State which one of the following statements is correct?
Group insurance covers a large numbers of persons in one policy
Group insurance is relatively cheaper than individual insurances
Both the statements above are correct *
Both the statements above are wrong
70. State which one of the following statements is correct?
Salary savings schemes policies are group insurance policies
Group insurance policies benefit only employees of big organisations
Both the statements above are correct
Both the statements above are wrong *
71. State which one of the following statements is correct?
In group insurance the premium changes every year *
In group insurance the premium is paid by the persons who are covered
Both the statements above are correct Both the statements above are wrong
72. State which one of the following statements is correct?
The members of a housing society can negotiate for a group insurance policy
A sports club can get a group policy for its members
Both the statements above are correct *
Both the statements above are wrong
73. State which one of the following statements is correct?
A bank can take out a group policy for its account holders A finance company can take out a group policy for those taking loans from it
Both the statements above are correct *
Both the statements above are wrong
74. State which one of the following statements is correct?
The amount of cover in a group policy is chosen by individual members
The amount of cover for each member is fixed by the terms of the policy *
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Both the statements above are correct
Both the statements above are wrong
75. State which one of the following statements is correct?
A master policy is issued in a group insurance policy *
Each member in a group policy pays the premium directly to the insurer Both the statements above are correct
Both the statements above are wrong
76. Which of the following is true for a group policy?
Copies of the master policy are given to all members by the insurer
The group has to be formed exclusively for the purpose of insurance
Entry into the scheme and exit out of it, is at the option of the members
The amount of the cover is determined by the scheme *
77. State which one of the following statements is correct?
Group insurance business is growing faster than individual business
Group business is socially very relevant
Both the statements above are correct *
Both the statements above are wrong
78. State which one of the following statements is correct?
A trade union can take out a group insurance policy for its members
The cover for an employee can be equal to his age multiplied by a fixed number
Both the statements above are correct *
Both the statements above are wrong
79. State which one of the following statements is correct?
A group insurance contract is between the insurer and the insured persons
The extent of insurance cover is chosen by each individual member
Both the statements above are correct
Both the statements above are wrong *
80. State which one of the following statements is correct?
The members covered by a group insurance policy changes every year
The amount of insurance for any member may change from year to year
Both the statements above are correct * Both the statements above are wrong
81. State which one of the following statements is correct?
Group insurance is the same as salary savings schemes
Premiums under some group policies are paid by governments *
Both the statements above are correct
Both the statements above are wrong
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82. In what respect does group insurance differ from salary savings schemes?
The person who pays the premium
Responsibility to pay the premium
Decision to take the policy
In all the above three respects *
83. In what ways does group insurance differ from salary savings schemes?
Number of persons insured under a policy
Responsibility of employer
Issue of premium receipts
In all the above three respects *
84. In what ways does group insurance differ from salary savings schemes?
Ownership of the policy
Mode of payment of premium
Parties to the contract
In all the above three respects *
85. Who amongst the following can take out a group insurance policy?
Office-goers who travel in the same compartment in the suburban train
A contractor who engages the same people every day on daily wages
A group of travelers on a package tour
Members of a toddy tappers association *
86. State which one of the following statements is correct?
In group policies, the chance of adverse selection is low * In group policies, every person is medically examined
Both the statements above are correct
Both the statements above are wrong
87. State which one of the following statements is correct?
In group policies, each case is separately underwritten
In group policies, personal histories are not examined *
Both the statements above are correct
Both the statements above are wrong
88. State which one of the following statements is correct?
Entry into and exit from group cover, is controlled by the terms of the policy
The extent of cover is not decided by the life to be insured
Both the statements above are correct *
Both the statements above are wrong
89. State which one of the following statements is correct?
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A group insurance cover is given only if there is a certain minimum number
A group policy is not granted if the group has been formed only to avail of cover
Both the statements above are correct *
Both the statements above are wrong
90. State which one of the following statements is correct? The cover in a group policy could depend on the ages of the lives insured
The cover could be a uniform flat rate for all employees of a certain category
Both the statements above are correct *
Both the statements above are wrong
91. Which of the following could be the basis of the cover in a group policy?
Amount of annual income
Level in the hierarchy
Age of the person
All the three above *
92. Which of the following could be the basis of the cover in a group policy?
Height of the life insured
Age of the life insured *
Size of the insureds family
All the three above
93. Who pays for the premium in the group policy?
The insured persons only
The person who has the master policy only
Both the insured persons and policyholder jointly Any one of the three ways above *
94. State which one of the following statements is correct?
The amount of cover under the master policy does not change
The premium under the group policy is the same every year
Both the statements above are correct
Both the statements above are wrong *
95. Which of the factors below help to avoid adverse selection in group policies?
No option to choose quantum of insurance cover * Minimum number to be included in the cover
Similarity in the nature of the jobs
All the above three factors
96. Which of the factors below help to avoid adverse selection in group policies?
Reputation of the employer
Records of the employer
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No option to choose entry or exit *
All the above three factors
97. State which one of the following statements is correct?
Group superannuation polices provide pensions to retiring employees *
A group superannuation policy can be taken by a company for its mortgagees Both the statements above are correct
Both the statements above are wrong
98. State which one of the following statements is correct?
Group gratuity policies require that trustees be appointed
Group superannuation policies require that trustees be appointed
Both the statements above are correct *
Both the statements above are wrong
99. State which one of the following statements is correct?
Trustees have to be appointed in all group policies
All group policies need approval of the income tax department
Both the statements above are correct
Both the statements above are wrong *
100. State which one of the following statements is correct?
Employers are required by law to take out group gratuity policies
Employers have different options to fund their pension liabilities *
Both the statements above are correct
Both the statements above are wrong
101 State which one of the following statements is correct?
Group policies help employers to avoid fluctuations in gratuity outgoes
Employees have less anxiety if employers have taken group policies
Both the statements above are correct *
Both the statements above are wrong
102. State which one of the following statements is correct?
Group policies are popular because of legal compulsions
Group policies give employees benefits better than legally required *
Both the statements above are correct Both the statements above are wrong
103. State which one of the following statements is correct?
The scope for group policies is limited by the requirements of the law
Group insurance policies can be tailor made to suit specific needs *
Both the statements above are correct
Both the statements above are wrong
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104 State which one of the following statements is correct?
Members of a group will get certificates showing details of cover
Profit sharing, in group insurance, is worked on actuarial bases
Both the statements above are correct *
Both the statements above are wrong
CHAPTER 5
UNDERWRITING TEST QUESTIONS
1. What is a proposal?
A request for an insurance cover
An offer to enter into a contract
Both a request and an offer to enter an insurance contract *
None of the above
2. Which one of the following statements is correct?
Selection is the same as underwriting *
The underwriter guarantees that the policy monies will be paid
Both the statements above are correct
Both the statements above are wrong
3. Which one of the following statements is correct?
The underwriter assesses the risk
No policy can be issued without the underwriters decision
Both the statements above are correct *
Both the statements above are wrong
4. Which one of the following statements is correct?
For a first class life, the premium charged is less than in the tabular rates
For a first class life, the vested bonus will be more than in other cases
Both the statements above are correct Both the statements above are wrong *
5. Which one of the following statements is correct?
The underwriter determines the premium to be charged
The underwriter is an employee of the insurer
Both the statements above are correct *
Both the statements above are wrong
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6. Which one of the following statements is correct?
An underwriter acts in the interests of the policyholders as a whole
An underwriter acts in the interests of the insurance company
Both the statements above are correct *
Both the statements above are wrong
7. Which one of the following statements is correct?
An underwriter charges extra premium for physical hazards *
An underwriter charges extra premium for moral hazards
Both the statements above are correct
Both the statements above are wrong
8. Which one of the following statements is correct?
A physical hazard affects the probability of death
Body measurements may indicate physical hazards
Both the statements above are correct *
Both the statements above are wrong
9. Financial underwriting is done to evaluate
The probability of the policy lapsing in future
The possibility of moral hazard *
Both lapse and moral hazard probabilities
Neither lapse nor moral hazard
10. The underwriters assessment will include
The genuineness of the need for insurance The intentions of the proposer in applying for insurance
Both genuineness and intentions *
Neither genuineness nor intentions
11. Moral hazard may be suspected in cases where
The life to be insured is old
The insurance is for a very large amount
In both the above cases *
In neither of the above cases
12. Which one of the following statements is correct?
Moral hazard exists if the proposed SA is ten times or more of the annual income
It is possible to quantify the extent of moral hazard and charge extra premium
Both the statements above are correct
Both the statements above are wrong *
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13. Which one of the following statements is correct?
An underwriter is an actuary
An underwriter uses financial and medical data *
Both the statements above are correct
Both the statements above are wrong
14. Which one of the following statements is correct?
A medical referee is an underwriter
The medical examination at the stage of the proposal is done by a medical referee
Both the statements above are correct
Both the statements above are wrong *
15. Which one of the following statements is correct?
A medical referee examines the life to be insured
The medical referee only sees the reports received by the insurer *
Both the statements above are correct
Both the statements above are wrong
16. Which one of the following statements is correct?
The underwriter makes his decision only after the medical referee sees the case
The medical referee usually sees only cases for large SA *
Both the statements above are correct
Both the statements above are wrong
17. Which one of the following statements is correct?
A medical referee is an employee of the insurer A medical referee is an underwriter
Both the statements above are correct
Both the statements above are wrong *
18. Which one of the following statements is correct?
In some cases, the underwriter consults the reinsurers before deciding *
The numerical method of underwriting is the best method
Both the statements above are correct
Both the statements above are wrong
19. Which one of the following statements is correct?
If the underwriter feels that the risk is more, he will accept at OR
If the underwriter feels that the risk is more, he may impose a lien *
Both the statements above are correct
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Both the statements above are wrong
20. A lien may be imposed by the underwriter if
The additional risk is expected to wear off in course of time *
The proposer is unlikely to agree to pay a higher premium
In both the above cases In neither of the above cases
21. Which one of the following statements is correct?
A clause restricts the benefits under the policy *
A clause is the same as a rider
Both the statements above are correct
Both the statements above are wrong
22. Which one of the following statements is correct?
A lien operates for a specific period
A clause excludes specific risks
Both the statements above are correct *
Both the statements above are wrong
23. Which one of the following statements is correct?
Underwriting is done only when there is a medical examination
Medical examination is necessary before a policy can be issued
Both the statements above are correct
Both the statements above are wrong *
24. The system of non medical underwriting is introduced because Medical examiners are not available in all areas
Most of the cases are found to be standard lives acceptable at OR
Of both the above reasons *
Of some other reasons
25. Under the system of non-medical underwriting
There is no restriction on age
There is no restriction on SA
There is restriction on both the SA and age *
Only some towns are covered
26. Which one of the following statements is correct?
Working women are treated on par with men
Educated women are treated on par with men
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Both the statements above are correct *
Both the statements above are wrong
27. Which one of the following statements is correct?
Underwriters are more cautious while considering cases on female lives *
Underwriters are more cautious while considering cases of educated women Both the statements above are correct
Both the statements above are wrong
28. Which one of the following statements is correct?
The agent is expected to make his report commenting on the risk factors
The agents report is important for the underwriter
Both the statements above are correct *
Both the statements above are wrong
29. Which one of the following statements is correct?
By writing a truthful report, the agent is helping the insurer
By writing a truthful report, the agent is helping the life to be insured
Both the statements above are correct *
Both the statements above are wrong
30. Which one of the following statements is correct?
Smoking is a hazard inviting additional premium
Drinking is a hazard inviting additional premium
Both the statements above are correct *
Both the statements above are wrong
31. Which one of the following statements is correct?
Underwriting standards are changing *
The underwriting standards of all insurers are the same
Both the statements above are correct
Both the statements above are wrong
32. Which one of the following statements is correct?
Underwriting is the process of verifying the level of risk of each new entrant *
Working ladies are charged extra premium, even if there are no impairments
Both the statements above are correct Both the statements above are wrong
33. Which one of the following statements is correct?
Standard life, normal life, average life, all mean the same thing *
The underwriter can definitely detect all attempts at adverse selection
Both the statements above are correct
Both the statements above are wrong
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34. Which one of the following statements is correct?
A clause restricts the benefits under the policy
A lien operates for a specific period
Both the statements above are correct *
Both the statements above are wrong
35. Which one of the following statements is correct?
In the case of a lien, the amount payable on death will vary from year to year *
A lien operates till the policy matures
Both the statements above are correct
Both the statements above are wrong
CHAPTER 6
INSURANCE DOCUMENTS
TEST QUESTIONS
1. Which one of the following statements is correct?
The policy is the basis of the insurance contract
The proposal is the basis of the insurance contract * Both the statements above are correct
Both the statements above are wrong
2. Which one of the following statements is correct?
The proposal must be signed by a witness *
The answers in the proposal form should be written in English
Both the statements above are correct
Both the statements above are wrong
3. Which one of the following statements is correct?
The proposal must be signed in the language in which it is printed
The proposal can be signed in any language *
Both the statements above are correct
Both the statements above are wrong
4. Which one of the following statements is correct?
The proposal must be written by the proposer himself / herself
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The proposal can be written by the agent
Both the statements above are correct
Both the statements above are wrong *
5. Which one of the following statements is correct?
The declaration in the proposal must be signed by the proposer * Anybody can sign the proposal form on behalf of an illiterate proposer
Both the statements above are correct
Both the statements above are wrong
6. Which one of the following statements is correct?
The declaration in the proposal makes the principle of good faith operational *
The declaration in the proposal establishes insurable interest
Both the statements above are correct
Both the statements above are wrong
7. Which one of the following statements is correct?
The information in the proposal form is used for underwriting
Wrong information in the proposal form can nullify the insurance contract
Both the statements above are correct *
Both the statements above are wrong
8. If the proposal form is filled up in a language not known to the proposer
The person who filled up the form has to sign a declaration *
The agent has to declare that he had explained the questions and answers
All further correspondence must be only in that language
The life to be insured must be medically examined
9. Which one of the following statements is correct?
Some of the particulars in the proposal form have no bearing on underwriting *
The name of the proposed nominee must be mentioned in the proposal
Both the statements above are correct
Both the statements above are wrong
10. Which one of the following statements is correct?
The personal statement must be witnessed by the agent
Personal statements are required only in medical cases Both the statements above are correct
Both the statements above are wrong *
11. Which one of the following statements is correct?
A copy of the proposal has to be given to the proposer *
A copy of the medical report has to be given to the proposer
Both the statements above are correct
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Both the statements above are wrong
12. Which one of the following statements is correct?
A copy of the personal statement is to be given to the proposer
A copy of the proposal has to be given to the proposer
Both the statements above are correct * Both the statements above are wrong
13. Which one of the following statements is correct?
The proposer will not be shown the agents report to the insurer
The proposer will not be shown the medical examiners report
Both the statements above are correct *
Both the statements above are wrong
14. Which of the following are confidential and will not be given to the proposer?
The medical report
The agents confidential report to the insurer
The medical referees advice
All of the above *
15. The proposal form and personal statement contain information relevant to determine
Level of risk
Moral hazard
Insurable interest All the three *
16. Which one of the following statements is correct?
FPR is the evidence of the insurance contract
The medical report is the basis of the insurance contract
Both the statements above are correct
Both the statements above are wrong *
17. Which one of the following statements is correct?
The statements in the medical report form part of the insurance contract
The medical examiner depends upon the statements in the personal statement *
Both the statements above are correct
Both the statements above are wrong
18. Which one of the following statements is correct?
The FPR is proof of commencement of risk *
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Risk does not commence till the policy is signed
Both the statements above are correct
Both the statements above are wrong
19. The FPR is issued when
The first premium is adjusted in the