** Do not take more than 1 Minute for each MCQ.

SET 5 : 50 MCQ’s : IC - 01 : PRINCIPLES OF INSURANCE

1. Risk is the degree of of a loss / damage :

a) Certainty
b) Uncertainty
c) Measurability
d) Probability
e) Possibility

2. Catastrophic risks are characterized by a significantly higher number of claims occurring due toevents
which are :
a) Large
b) Multiple
c) Small
d) Single
e) Higher

3. is something that can cause Harm and is also known as “ the accelerator of a Peril ”.
a) Risk
b) Enemy
c) Accident
d) Loss
e) Hazard

4. Loss of a limb permanently damaged due to an accident is an example of :

A) Actual loss
B) Consequential loss
C) Total loss
D) Actual total loss
E) Partial loss

5. The four ways to manage risks include all of the following, except:
A) Risk Identification
B) Risk Avoidance
C) Risk Reduction
D) Risk Retention
E) Risk Transfer
6. A technical term used to describe spreading of risk among different avenues is known as :
A) Value investing
B) Hedging
C) Risk spread ratio
D) Risk transfer
E) None of the above

7. An individual can manage the risk associated to his / her life by of risk by buying a
plan.
A) Transfer ; Motor insurance
B) Retention ; Personal accident
C) Reduction ; Health insurance
D) Transfer ; Life insurance
E) Controlling ; Financial

8. Which of the following is an economic resource, is either tangible or intangible, is capable of beingowned
and can produce a value.?
a) Car
b) House
c) Rented property
d) Factory
e) Asset

9. When was Triton Insurance Company Ltd established?

a) 1834
b) 1850
c) 1907
d) 1938

10. When was the Insurance Regulatory and Development Authority constituted?
a) 1938
b) 1971
c) 1993
d) 1999

11. In case of Life Insurance, premium will be influenced by which of the following factors :
A) Age & Sex
B) Occupation
C) Habits & Health conditions
D) Family History
E) All of the above
12. Living too long is considered as a :
A) Curse
B) Blessing
C) Fortune
D) Risk

13. Marine insurance deals with goods being transported by :

A) Only Sea
B) Only rail & roads
C) Only Air
D) Both sea and all marine related risks
E) All of the above

14. Which of the following insurance policies provide coverage of intangible assets ?
A) Exporters risk plans by Export Credit & Guarantee Corporation
B) Personal Accident plans
C) Professional Liability insurance plans
D) A and C
E) A and B

15. What are the ways to manage the risks :

A) to avoid or prevent the risks
B) To retain the risks
C) To reduce the risks
D) To transfer the risks
E) All of the above

16. The net profit of an insurance company is :

A) Distributed among the policy holders
B) Paid to the govt of India in emergency
C) Held as a reserve to pay claims of policies in force
D) Paid to the shareholders as dividend
E) Distributed among the top management

17. In general the risks which are covered under Reinsurance are in nature.
A) Large
B) Catastrophic
C) Speculative
D) Dynamic
E) Fundamental
18. The non-life insurance business helps in economic growth of business community by :
A) Reducing the risk exposure
B) Helping to stand out again in cases of losses
C) Enabling the business to acquire loans from the banks easily
D) Safeguards the overall financial stability
E) All of the above

19. Which organization is doing Life insurance business but is outside the rules of IRDA and
Insurance Act ?
A) Life Insurance Corporation of India
B) Postal Life Insurance
C) Agriculture Insurance Co. Of India
D) SBI Life Insurance Co. Ltd
E) None of the above

20. The duties of insurance agents in India are specified by the :

A) IRDA
B) Insurer
C) Both IRDA & Insurer
D) IRDA (Licensing of Insurance Agents) Regulations, 2000
E) Insurance Act, 1938

21. The insurance agents who hold the license to act as agent for both Life and General insurers, as well as
for a Health insurer, are called :
A) Corporate Agents
B) Brokers
C) Composite Agents
D) TPA’s
E) Combined Agents

22. These are the cases in which the medical examiners help is sought by insurance companies.
Choose the incorrect option :
A) When a higher sum assured is demanded by the Proposer
B) In doubtful cases of early death claim
C) Veterinary doctors are used In Cattle insurance
D) To assess the correct age of the proposer
E) To assess the proximate cause in doubtful cases of health insurance

23. The tenure of Insurance Ombudsman is for :

A) 1 year
B) 2
C) 5
 D) 3
E) 10

24. Which of the following Acts has the provisions for monitoring and control of operations of
Insurance companies :
A) Insurance Act, 1938
B) IRDA Act, 1999
C) Deposit Insurance & Credit Guarantee Act, 1961
D) Public Liability Insurance Act, 1991

25. The term used to describe the work output of one department being an input for the work of
another department in the same organisation is called customer.
A) Internal
B) External
C) Output
D) Relational
E) Inside

26. Very high Sum Assured, special premiums and case-to-case underwriting are the characteristics of
which insurance segment ?
A) Corporate
B) High Net Worth Individuals
C) Non Resident Indians
D) Retail -- SME
E) Multi-National Companies

27. How will be the mindset of the person who receives the death claim in life insurance ?
A) Reluctant
B) Doubtful
C) Regretful
D) Happy
E) Satisfied and grateful

28. The Code of Conduct for insurance agents has been prescribed in IRDA (Licensing of Insurance
Agents) Regulations, :
A) 2000
B) 2002
C) 2001
D) 2004
E) 1999
29. For an insurance contract to be valid and enforceable, the subject matter should be :
A) Insured
B) Risk
C) Legal
D) Policy wordings
E) Sum Assured

30. A person’s insurable interest in his own life is :

A) Limited
B) Partial
C) Unlimited
D) 50 %
E) Double

31. Who among the following has unlimited and mutual insurable interest in each other :
A) Employer - Employee
B) Partners of a firm
C) Husband - Wife
D) Creditor - Debtor
E) Bank - Mortgage

32. In motor insurance policies, the sum assured of the policy is known as IDV i.e :
A) Insured’s Declared Value
B) Insurer’s Declaration Value
C) Insured’s Declaration Value
D) Insurer’s Declared Value

33. What are the corollaries of the Principle of Indemnity ?

A) Utmost Good Faith
B) Subrogation Clause
C) Contribution clause
D) Both A and B
E) Both B and C

34. The principle of Contribution works on the basis of proportionate :

A) Liability
B) Insurance
C) Losses
D) Indemnity
35. In case of non-life insurance the duty of disclosure arises at the time of :
A) Claim
B) Renewal
C) Insurance
D) Re-insurance
E) Payment of Premium

36. An individual is said to enter into a contract if he is years old :

A) 21
B) 18
C) 25
D) 20
E) 23

37. The plans which also have a savings element along with death cover are called :
A) Endowment plans
B) Pure Endowment plans
C) Endowment Assurance plans
D) Whole Life Risk plans
E) Pure Risk plans

38. The amount of Rider Sum Assured can be greater than the Basic Sum Assured.
A) True
B) False

39. The major portion of this fund is invested in the stock markets. It is called :
A) Debt fund
B) Equity fund
C) Stock fund
D) Capital fund
E) Money Market fund

40. The basis of calculation of the NAV in ULIP Plans is :

A) Weekly
B) Daily
C) Fortnightly
D) Monthly
E) Bi-monthly
41. The insurance plans which give periodic pay outs to the policyholder are called :
A) Joint plans
B) Annuities
C) Whole Life plans
D) Unit Linked Insurance plans
42. What is the second largest class of non life insurance in India ?
A) Fire
B) Marine
C) Miscellaneous
D) Health
E) Motor

43. Export import shipments in a Marine Cargo insurance are covered under the terms of :
A) All Cargo clauses
B) Institute Cargo clauses
C) Custom Cargo clauses
D) Local Cargo clauses
E) Ministry of Shipping Cargo clauses

44. A comprehensive Motor policy covers the damage to which of the following :
A) Car only
B) Owner
C) Driver
D) Third parties
E) All of the above

45. If there is no claim during the years, the health insurance company gives a discount on the
renewal premium. This is called :
A) Cumulative Bonus
B) Policy Bonus
C) No Claim Bonus
D) Renewal Discount

46. Which policy protects the Employer from the losses for accidents to the employees while at work
?
A) Workmen’s Compensation insurance
B) Employee All Risk policy
C) Factory Risk policy
D) Industrial All Risk policy
E) Plant & Machinery insurance

47. The calculation of surrender value depends upon the .

A) Surrender Value Factor
B) Paid Up Value
C) Only A
D) Only B
E) Both A and B
48. The fund made out of the contributions of the State and the Central governments to pay for the claims
for third parties where the motor vehicle is absconding after the Hit & Run accidents is knownas .
A) State Accident Fund
B) Hit & Run Fund
C) MACT Fund
D) Central Trauma Fund
E) Solatium Fund

49. Any wrong statements made by the person requesting for insurance, made in writing or may beverbal,
which are related to the risk, are called .
A) Representations
B) Conditions precedent to contract
C) Conditions precedent to liability
D) Misrepresentations

50. Which ratio is an indicator of insurer’s ability to pay claims ?

A) Incurred Claims Ratio
B) Solvency Ratio
C) Claims Settlement Ratio
D) Loss Ratio