IC 34 Question Bank - Answer Paper

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Question Bank
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IC 34
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CHAPTER 1
INTRODUCTION TO INSURANCE
1. Which among the following is not a function of insurance?
I. Risk mitigation
II. Risk transfer
III. Risk tracking
IV. Risk reduction
The correct option is III.
Risk tracking is not a function of insurance.
2. Chance of loss is referred to as _________.
I. Luck
II. Risk
III. Bad luck
IV. Peril
The correct option is II.
Chance of loss is referred to as risk.
3. Insurance deductible is an example of ___________.
I. Risk mitigation
II. Risk avoidance
III. Risk transfer
IV. Risk retention
The correct option is IV.
Insurance deductible is an example of risk retention.
4. Cost of risk is determined by ________________.
I. Probability only
II. Impact only
III. Probability and impact
IV. Timing of risk
Probability and impact of the risk determine the cost of risk.
5. How does insurance help in easing access to credit?
I. Insurer provides free credit
II. Banks lend easily if an application is backed by insurance
III. Person who can pay insurance is assumed to be creditworthy
IV. Regulations mandate provision of credit to the insured
Banks lend easily if an application is backed by insurance.
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6. Lloyds Coffee House is regarded as the place where insurance started the way it is
practised today. Lloyds is located in __________.
I. Bangalore
II. Singapore
III. London
IV. Dubai
Lloyds is located in London.
7. Risk transfer through risk pooling is called________.
I. Savings
II. Investments
III. Insurance
IV. Transfer
Risk transfer through risk pooling is called insurance.
8. The measures to reduce chances of occurrence of risk are known as _____.
I. Risk retention
II. Loss prevention
III. Risk transfer
IV. Risk avoidance
Loss prevention measures reduce the chance of occurrence of risk.
9. By transferring risk to insurer, it becomes possible:
I. To enjoy from floods
II. To enjoy and make money from insurance
III. To enjoy a fire in the factory
IV. To enjoy peace of mind and plan ones business more effectively
Insurance provides peace of mind and helps one plan his business effectively.
10. Origins of modern insurance business can be traced to________.
I. Bottomry
II. Lloyds
III. Rhodes
IV. Malhotra Committee
Origins of modern insurance can be chased to Lloyds.
11. In the insurance context risk retention indicates a situation where__________.
I. possibility of loss or damage is not there
II. loss producing event has no value
III. property is covered by insurance
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IV. one decides to bear the risk and its effects

When one decides to bear the consequence of a risk, he is said to have retained risk.
12. Which of the following statement is true?
I. Insurance protects the asset
II. Insurance prevents its loss
III. Insurance reduces possibilities of loss
IV. Insurance pays when there is loss of asset
Insurance compensates for the loss of an asset.
13. Out of 400 houses, each valued at Rs.20, 000, on an average 4 houses get burnt every year
resulting in a combined loss of Rs.80, 000. What should be the annual contribution of each
house owner to make good this loss?
I. Rs.100/II. Rs.200/III. Rs.80/IV. Rs.400/The correct option is II.
Each house owner needs to contribute Rs 200.
14. Which of the following statements is true?
I. Insurance is a method of sharing the losses of a few by the many
II. Insurance is a method of transferring the risk of an individual to another individual
III. Insurance is a method of sharing the losses of many by a few
IV. Insurance is a method of transferring the gains of a few to the many
The correct option is I.
Insurance is a method of sharing the losses of a few by the many.
15. Before acceptance of a risk, the insurer arranges a survey and inspection of the property.
Why?
I. To assess the risk for rating purposes
II. To find out how the insured purchased the property
III. To find out whether other insurers have also inspected the property
IV. To find out whether neighbouring property also can be insured
Before acceptance of the risk, an insurer conducts an investigation in order to assess the risk
for rating purpose.
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CHAPTER 2
PRINCIPLES OF INSURANCE
1. Which one of the following does not represent an insurable risk?
I. Fire
II. Stolen goods
III. Burglary
IV. Loss of goods due to ship capsizing
Stolen goods violate the principle of legality and hence do not represent an insurable risk.
2. Which among the following cannot be an element in a valid insurance contract?
I. Offer and acceptance
II. Coercion
III. Consideration
IV. Legality
Coercion is not an element of a valid contract.
3. Mr. Pinto contracted pneumonia as a result of lying on wet ground after a horse riding
accident. The pneumonia resulted in death of Mr. Pinto. What is the proximate cause of
the death?
I. Pneumonia
II. Horse
III. Horse riding accident
IV. Bad luck
The horse riding accident set things in motion that eventually resulted in Mr Pintos death
and hence it is the proximate cause.
4. Moral hazard means:
I. Dishonesty or character defects in an individual
II. Honesty and values in an individual
III. Risk of religious beliefs
IV. Hazard of the property to be insured
Moral hazard means dishonesty or character defects in an individual.
5. Risk indicates:
I. Fear of unknown
II. Chance of loss
III. Disturbances at public place
IV. Hazard
Risk indicates a chance of loss.
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6. ______________ means spreading ones investment in different kinds of assets.

I. Pooling
II. Diversification
III. Gambling
IV. Dynamic risk
Diversification means spreading ones investment in different kinds of assets.
7. _____________ is not an example of an asset.
I. House
II. Sunlight
III. Plant and machinery
IV. Motor car
Sunlight cannot be classified as asset as it fails the test of scarcity and ownership.
8. ______________ is not an example of risk.
I. Damage to car due to accident
II. Damage of cargo due to rain water
III. Damage to car tyre due to wear and tear
IV. Damage to property due to fire
Damage as a result of wear and tear cannot be treated as risk.
9. Earthquake is an example of:
I. Catastrophic risk
II. Dynamic risk
III. Marginal risk
IV. Speculative risk
Earthquake is an example of catastrophic risk.
10. Select the most appropriate logical equivalence for the statement.
Statement: Insurance cannot protect an asset from loss or damage.
I. True
II. False
III. Partially true
IV. Not necessarily true
Insurance cannot protect an asset from loss or damage.
11. __________________ means transfer of all rights and remedies, with respect to the
subject matter of insurance, from insured to insurer.
I. Contribution
II. Subrogation
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III. Legal hazard

IV. Risk pooling
Subrogation means transfer of all rights and remedies, with respect to the subject matter of
insurance, from insured to insurer.
12. An example of a fact which need not be disclosed unless asked for is ______________ by
the insurer.
I. Age of the insured
II. Presence of fire extinguisher
III. Heart ailment
IV. Other insurance details
Presence of fire extinguisher need not be disclosed while buying insurance, unless asked for.
13. ________________ is a wrong statement made during negotiation of a contract.
I. Misrepresentation
II. Contribution
III. Offer
IV. Representation
Misrepresentation is a wrong statement made during negotiation of a contract.
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CHAPTER 3
MARKETING AND SELLING INSURANCE
1. Which among the following is not an essential component of the sales process?
I. Goodwill
II. Buyer
III. Seller
IV. Product / Service
Goodwill is not an essential component of the sales process.
2. Which among the following activities can be classified as promotion?
I. Product development
II. Quality control
III. Product advertisement
IV. Product benchmarking
Product advertisement is a means of promotion.
3. Which among the following statements best describes a Testimonial?
I. An endorsement from a satisfied customer
II. Test result for a product in a benchmarking test
III. List of tests that a product must pass
IV. Money required to test a product
A testimonial is an endorsement from a satisfied customer.
4. General insurance could help in achieving all of the following objectives EXCEPT:
I. Protection against loss to business premises
II. Making windfall gains on the occurrence of a contingent event
III. Protection against errors and omissions
IV. Protection against property losses
General insurance cannot be used to make windfall gains on the occurrence of a contingent
event.
5. How can insurance penetration be determined?
I. Ratio of insurance premiums to GDP.
II. Ratio of insurance companies to the local population
III. Ratio of insurance premium to per capita income
IV. Ratio of subscribers to the insurance policies available
Insurance penetration is the ratio of insurance premiums to GDP.
6. Classification of customers into various market segments, having common features is
known as _____________.
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I. Sales
II. Segmentation
III. Marketing
IV. Prospecting
Classification of customers into various market segments, having common features is known
as segmentation.
7. The key to successful closing lies in helping the prospect to say ________.
I. No
II. Dont know
III. Yes
IV. Maybe
The key to successful closing lies in helping the prospect to say Yes.
8. Which of the following is not part of sales process?
I. Prospecting
II. Sales interview
III. Loss assessment
IV. Closing
Loss assessment is not a part of the sales process.
9. _______________ is not among the Ps of marketing.
I. Price
II. Product
III. Protection
IV. Place
Protection is not among one of the Ps of marketing.
10. Insurance is part of ___________ industry.
I. Manufacturing
II. Financial services
III. Consumer goods
IV. Share market
Insurance is a part of the financial services industry.
11. Negotiation is a process _____________.
I. To win some how
II. To give discounts to the customer
III. To reach a win-win situation
IV. To argue and defeat the prospect
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Negotiation is a process to reach at a win-win situation.
12. Prospecting in an insurance sale is

I. Gathering the names of people who may be interested in insurance
II. Preparing a list of all the persons in the city
III. Enlisting all the policyholders of the branch office
IV. Preparing list of all the agents in the neighbourhood
Prospecting in an insurance sale is gathering the names of people who may be interested in
insurance.
13. Need-gap analysis involves, finding about prospect:
I. Identifying the areas where the prospect needs insurance protection
II. Identifying people to work as insurance agents
III. Identifying how much assets a prospect has
IV. Indentifying the poverty level of the prospects
Need-gap analysis involves, finding about prospect and identifying the areas where the
prospect needs insurance protection.
14. Insurance density is:
I. Life insurance premium
II. Ratio of premium to income
III. Premium per capita
IV. Coverage per capita
Insurance density is premium per capita.
15. Cold Calling is:
I. Meeting customers in winter
II. Meeting customers when they are suffering from cold
III. Meeting people unannounced
IV. Meeting customer after fire was extinguished
Cold calling involves meeting people unannounced.
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CHAPTER 4
LEGAL AND REGULATORYASPECTS OF INSURANCE AGENCY
1. What is the primary purpose of insurance regulations?
I. To generate fee income
II. Protect the interests of policyholders
III. To settle customer disputes
IV. To control the market share of private insurers
The primary purpose of insurance regulations is to protect the interests of policyholders.
2. Which among the following activities is prohibited as per the provisions of Insurance Act,
1938?
I. Keeping aside reserves to meet solvency requirements
II. Using rebates as a tool to sell insurance policies
III. Prospecting customers
IV. Limiting management expenses
Using rebates as a tool to sell insurance policies is prohibited under Insurance Act 1938.
3. Insurance agents who hold licence to act as an agent for both a life insurer and a general
insurer are called _______________.
I. Common insurance agents
II. Composite insurance agents
III. Multiple insurance agents
IV. General insurance agents
Insurance agents who hold licence to act as an agent for both a life insurer and a general
insurer are called composite insurance agents.
4. Which of the below intermediary is not involved in procurement of business?
I. Insurance brokers
II. Individual agents
III. Surveyors
IV. Corporate agents
Surveyors are not involved in procurement of insurance business.
5. What does the term Caveat Emptor mean?
I. Buyer beware
II. Seller beware
III. Insurance buyer beware of miselling
IV. Insurance agent beware of customer requirement
The principle of Caveat Emptor implies buyer beware.
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6. Moral hazard means:

I. Dishonesty or character defects in an individual
II. Honesty and values in an individual
III. Risk of religious beliefs
IV. Hazard of the property to be insured
7. Insurance agent represents the ______________.
I. Insurance company
II. Sub-agent
III. Co-agent
IV. Broker
Insurance agent represents the insurance company.
8. Licence to work as an insurance agent is issued by __________.
I. General Insurance Corporation (GIC)
II. Insurance Regulatory & Development Authority (IRDA)
III. By the respective life insurance company
IV. Finance Ministry
Licence to work as an insurance agent is issued by the IRDA.
9. Agents licence is to be renewed __________.
I. Every year
II. After 5 years
III. After 3 years
IV. After 15 years
Agents licence is to be renewed every three years.
10. Identify the statement which is not correct. Insurance agent should __________.
I. Indicate the scale of commission if asked by the customer
II. Share the commission by way of rebate
III. Disclose his licence on demand
IV. Indicate the premium to be charged
Insurance agent cannot share commission through rebates.
11. Rs.______________ is the fees payable to the Authority for issue / renewal of licence to
Act as an Insurance Agent or Composite Insurance Agent.
I. 250
II. 150
III. 520
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IV. 100
Rs. 250 is the fees payable to the Authority for issue/ renewal of licence to act as an
insurance agent or composite insurance agent
12. The Authority may issue duplicate licence in case it is ____________.
I. Lost
II. Revoked
III. Suspended
IV. Withdrawn
The Authority may issue duplicate licence in case it is lost.
13. If an agent is found guilty of criminal misappropriation, the designated person will
_______________.
I. Cancel the licence
II. Issue a duplicate licence
III. Renew the existing licence
IV. Take some fees from the agent
If an agent is found guilty of criminal misappropriation the designated person will cancel the
license.
14. Minimum qualification required for an insurance agent is _______ pass.
I. Graduate
II. 10th
III. Post-Graduate
IV. 7th

Minimum qualification required for an insurance agent is 10th pass.
15. ________________ may deal with more than one Life Insurance Company or general
insurance company or both.
I. Agent
II. Broker
III. Corporate agent
IV. Retail agent
An insurance broker may deal with more than one life insurance company or general
insurance company or both.
Page | 13
CHAPTER 5
DOCUMENTATION
1. What is the significance of the principle of contribution?
I. It ensures that the insured also contributes a certain portion of the claim along with the
insurer
II. It ensures that all the insured who are a part of the pool, contribute to the claim made
by a participant of the pool, in the proportion of the premium paid by them
III. It ensures that multiple insurers covering the same subject matter; come together and
contribute the claim amount in proportion to their exposure to the subject matter
IV. It ensures that the premium is contributed by the insured in equal installments over
the year.
The principle of contribution ensures that multiple insurers covering the same subject matter;
come together and contribute the claim amount in proportion to their exposure to the subject
matter
2. As per guidelines, an insurance company has to process an insurance proposal within
__________.
I. 7 days
II. 15 days
III. 30 days
IV. 45 days
As per guidelines, an insurance company has to process an insurance proposal within 15 days.
3. In case the premium payment is made by cheque, then which of the below statement will
hold true?
I. The risk may be assumed on the date on which the cheque is posted
II. The risk may be assumed on the date on which the cheque is deposited by the
insurance company
III. The risk may be assumed on the date on which the cheque is received by the insurance
company
IV. The risk may be assumed on the date on which the cheque is issued by the proposer
In case the premium payment is made by cheque, then the risk may be assumed on the date
on which the cheque is posted.
4. Which of the below statement is true with regards to cover notes?
I. Cover notes are predominantly used in life insurance
II. Cover notes are predominantly used in all classes of general insurance
III. Cover notes are predominantly used in health insurance
IV. Cover notes are predominantly used in marine and motor classes of general insurance
The correct option answer is IV.
Cover notes are predominantly used in marine and motor classes of general insurance.
5. Which of the below statement is correct with regards to a warranty?
Page | 14
I. A warranty is a condition which is implied without being stated in the policy

II. A warranty is a condition expressly stated in the policy
III. A warranty is a condition expressly stated in the policy and communicated to the
insured separately and not as part of the policy document
IV. If a warranty is breached, the claim can still be paid if it is not material to the risk
A warranty is a condition expressly stated in the policy.
6. If certain terms and conditions of the policy need to be modified at the time of issuance,
it is done by setting out the amendments through __________.
I. Warranty
II. Endorsement
III. Alteration
IV. Modifications are not possible
If certain terms and conditions of the policy need to be modified at the time of issuance, it is
done by setting out the amendments through endorsement.
7. Which of the below statement is correct with regards to renewal notice?
I. As per regulations there is a legal obligation on insurers to send a renewal notice to
insured, 30 days before the expiry of the policy
II. As per regulations there is a legal obligation on insurers to send a renewal notice to
III. As per regulations there is a legal obligation on insurers to send a renewal notice to
IV. As per regulations there is no legal obligation on insurers to send a renewal notice to
insured before the expiry of the policy
As per regulations there is no legal obligation on insurers to send a renewal notice to insured
before the expiry of the policy.
8. __________ is the maximum limit of liability of insurer under the policy
I. Sum insured
II. Premium
III. Surrender value
IV. Amount of loss
Sum insured is the maximum limit of liability of insurer under the policy.
9. _______________ is the consideration or price paid by insured under a contract
I. Claim amount
II. Surrender value
III. Maturity amount
IV. Premium
Premium is the consideration or price paid by insured under a contract.
Page | 15
10. A document which provides an evidence of contract of insurance is called________

I. Policy
II. Cover note
III. Endorsement
IV. Certificate of insurance
A document which provides an evidence of contract of insurance is called policy.
11. The duty of disclosure arises
I. Prior to inception of the policy
II. After inception of the policy
III. Prior to inception and continues during the policy
IV. There is no such duty
The duty of disclosure arises prior to the inception and continues even during the policy
12. Material fact
I. Is the value of all material covered in a policy
II. Not important for assessing the risk
III. Is important as it influences the decision of the underwriter
IV. Is not important as it has no bearing on the decision of the underwriter
Material fact is important as it influences the decision of the underwriter.
13. Fire proposal seeks to know
I. Process of manufacture
II. Details of material stored
III. Construction of building
IV. All the above
Fire proposal seeks to know process of manufacture, details of material stored and
construction of the building.
14. Premium cannot be received
I. In cash
II. By cheque
III. By promissory note
IV. By credit card
The correct option is III
Premium cannot be received by promissory note.
15. The certificate of Motor Insurance
I. Is not mandatory
II. Has to be kept with self always
Page | 16
III. Has to be kept in the car always

IV. Has to be kept in the bank locker
The certificate of Motor Insurance has to be kept in car always.
16. A warranty
I. Is a condition expressly stated in the policy
II. Has to be complied with
III. Both a and b
IV. None of the above
The correct option is III
A warranty is a condition expressly stated in a policy and has to be complied with.
17. Renewal Notice for Motor insurance is issued by
I. The Insured before expiry of the policy
II. The Insurer before expiry of the policy
III. The Insured after expiry of the policy
IV. The Insurer after expiry of the policy
Renewal Notice for Motor insurance is issued by the insurer before expiry of the policy
Page | 17
CHAPTER 6
THEORY AND PRACTICE OF PREMIUM RATING
1. Identify the two factors that affect insurance ratemaking.
I. Probability and severity of risk
II. Source and nature of risk
III. Source and timing of risk
IV. Nature and impact of risk
Probability and severity of risk affect insurance ratemaking.
2. What is pure premium?
I. Premium sufficiently big enough to pay for losses only
II. Premium applicable to marginal members of the society
III. Premium after loading for administrative costs
IV. Premium derived from the most recent loss experience period
Pure premium is sufficient enough to pay for losses, however it does not account for
administrative expenses or profit.
3. What is expected of an agent when she detects a moral hazard?
I. Continue with the insurance as before
II. Report the same to the insurer
III. Ask for a share in the claims
IV. Turn a blind eye
An insurance agent should report to the insurer any detection of moral hazard.
4. Suggest an insurance scheme for a doctor to protect him from any claims of negligence
against him.
I. Personal accident insurance
II. Liability insurance
III. Marine hull insurance
IV. Health insurance
Liability insurance can insure the doctor against claims of negligence.
5. _____________ decides whether to accept or not to accept the risk.
I. Assured
II. Underwriter
III. Agent
IV. Surveyor
Underwriter decides whether to accept or not to accept the risk.
6. _______________ is the price of a given unit of insurance.
Page | 18
I. Rate
II. Premium
III. Sum Assured
IV. Bonus
Rate is the price of a given unit of insurance.
7. ___________ is the maximum amount that an insurance company will indemnify to
someone who files a claim.
I. Sum insured
II. Premium
III. Rider
IV. Benefits
Sum insured is the maximum amount that an insurance company will indemnify to someone
who files a claim.
8. ______________ is not a source of information for underwriter.
I. Annual accounts of a proposer
II. Pre-acceptance risk survey of the asset
III. Proposal form
IV. Registration certificate of insurer
Registration certificate of insurer is not a source of information for underwriter.
9. Hazards are:
I. Factors that increase the impact of losses
II. Factors that increases the frequency of loss
III. Factors that increase the impact and severity of losses
IV. Factors that decrease the impact and severity of losses
Hazards are factors that increase the impact and severity of losses.
10. Which of the following is true?
Physical Hazards:
I. Are not important for rate making
II. Cannot be ascertained
III. Can be calculated from the balance sheet
IV. Can be ascertained from information given in a proposal form
Physical hazards can be ascertained from information given in a proposal form.
11. In motor insurance one of the warranties is:
I. The vehicle should be washed daily
II. The vehicle should not be used for speed testing
Page | 19
III. The vehicle should not be used for carrying luggage for personal use
IV. The vehicle should not be run more than 200 km per day.
In motor insurance one of the warranties is that vehicle should not be used for speed testing.
12. The purpose of deductible clause is to:

I. To avoid claim payment
II. To eliminate payment of small claims
III. To harass the policyholder
IV. To increase the premium
The purpose of deductible clause is to eliminate small claims.
13. Installation of sprinkler system in the premises:
I. Increases risk
II. Decreases the risk
III. Neither increases nor decreases risk
IV. Increases risk of hooding
Installation of sprinkler system in the premises decreases the risk of fire.
14. Insureds declared value in motor insurance includes:
I. Registration
II. Manufacturers cost price
III. Manufacturers selling price
IV. Arbitrary price component
Insureds declared value in motor insurance includes manufacturers selling price.
Page | 20
CHAPTER 7
PERSONAL AND RETAIL INSURANCE
1. Which of the below statement is correct with regards to an accident?
I. An accident usually denotes a sudden, foreseen and an unexpected event.
II. An accident usually denotes a sudden, unforeseen and an expected event.
III. An accident usually denotes a sudden, foreseen and an expected event.
IV. An accident usually denotes a sudden, unforeseen and an unexpected event.
An accident usually denotes a sudden, unforeseen and an unexpected event.
2. Which of the below will be treated in a day care center?
I. Cancer
II. Cataract
III. Stroke
IV. Heart attack
Cataract will be treated in a day care centre.
3. Which of the below statement is correct with regards to corporate frequent travelers
plan?
I. It is valid for one trip
II. It is valid for 6 trips or 6 months whichever happens first
III. It is an annual policy valid for multiple trips with a limit on maximum number of trips
IV. It is an annual policy valid for multiple trips but ends with the first claim
Corporate frequent traveler plan is an annual policy valid for multiple trips with a limit on
maximum number of trips.
4. Which of the below statement is correct with regards to a householders insurance policy?
I. A named peril policy may be purchased as a less expensive alternative to a
comprehensive coverage policy that tends to offer coverage to most perils.
II. A comprehensive policy that tends to offer coverage to most perils; may be purchased
as a less expensive alternative to a named peril policy.
III. A named peril policy or comprehensive policy comes at the same price.
IV. With regards to a householders policy, only a named peril policy can be bought and
comprehensive policies are not available.
A named peril policy may be purchased as a less expensive alternative to a comprehensive
coverage policy that tends to offer coverage to most perils.
5. Under the shopkeeper policy, the insured may opt for an additional Fixed plate glass and
sanitary fittings cover. This will cover accidental loss of damage to which of the
following?
I. Fixed plate glass
Page | 21
II. Sanitary fittings

III. Neon signs
IV. All of the above
Under the shopkeeper policy, the insured may opt for an additional Fixed plate glass and
sanitary fittings cover. This will cover accidental loss of damage to fixed plate glass, sanitary
fittings and neon signs.
6. Motor insurance should be taken in whose name?
I. In the name of the vehicle owner whose name is registered with Regional Transport
Authority
II. If the person who will be driving the vehicle is different from the owner, then in the
name of the person who will be driving the vehicle, subject to approval from Regional
Transport Authority
III. In the name of any family member of the vehicle owner, including the vehicle owner,
subject to approval from the Regional Transport Authority
IV. If the person who will be driving the vehicle is different from the owner, then primary
policy should be in the name of the vehicle owner and add-on cover in the name of the
person who will be driving the vehicle.
Motor insurance should be taken in the name of the vehicle owner whose name is registered
with Regional Transport Authority
7. The following is not covered in Personal Accident
I. Death
II. Suicide
III. Permanent disability
IV. Loss of one hand
Suicide is not covered in Personal Accident.
8. Personal accident cover is only
I. Whilst travelling abroad
II. Whilst travelling in India
III. For travelling both in India and abroad
IV. Whilst travelling in India and neighboring countries
Personal accident cover is only for travelling both in India and abroad
9. Health insurance usually covers
I. Pre-hospitalization treatment
II. Post-hospitalization treatment
III. Domiciliary treatment
Page | 22
Health insurance covers all of the above: pre-hospitalisation treatment, post-hospitalisation

treatment, domiciliary treatment.
10. Travel insurance covers
I. Delay in baggage
II. Emergency hospitalization
III. Loss of checked baggage
IV. All the above
Travel insurance covers all of the above: delay in baggage, emergency hospitalisation and loss
of checked baggage.
11. For Travel insurance the sum insured depends on
I. Age
II. Number of days of trip
III. Countries to be visited
IV. All the above
For travel insurance the sum insured depends on all of the above: age, number of days of trip,
countries to be visited.
12. In householders insurance
I. Gold and silver ornaments are covered
II. Contents of ones shop is covered
III. Cars owned by the family are covered
IV. Parcels sent by post are covered during transit.
In householders insurance gold and silver ornaments are covered.
13. Householders insurance covers
I. Only the structure of the home
II. Only the Contents of the home
III. Both the structure and contents
IV. Both Structure and contents only when insured is not at home
Householders insurance covers both the structure and contents.
14. In shop keepers insurance, which of the following are not covered?
I. Machinery breakdown
II. Malicious damage
III. Business interruption
IV. Willful destruction by insured
In shopkeepers insurance, willful destruction by insured is not covered.
Page | 23
15. In shop keepers insurance which of the following are usually not covered
I. Money in till/counter at business premises
II. Money in transit from bank to business premises
III. Money in safe at business premises
IV. Money carried by customer to business premises.
In shopkeepers insurance money carried by customer to business premises is usually not
covered.
16. Shop insurance covers
I. Dishonest acts of employees
II. Dishonest acts of insured
III. Dishonest acts of customers
IV. Dishonest acts of money lenders
Shop insurance covers dishonest act of employees.
Page | 24
CHAPTER 8
COMMERCIAL INSURANCE
1. A fire policy for commercial risks covers the perils of ________
I. Explosion
II. Implosion
III. Both of the above
Fire policy for commercial risks covers the perils of explosion and implosion.
2. A business interruption insurance policy can be taken only in conjugation with
____________.
I. Standard fire and special perils policy
II. Standard fire and marine policy
III. Standard and special perils policy
IV. Standard Engineering and marine policy
A business interruption insurance policy can be taken only in conjugation with standard fire
and special perils policy.
3. The premium for burglary policy depends on ______________.
I. Nature of insured policy
II. Moral hazard of the insured himself
III. Construction and location of the premises
The premium for burglary policy depends on the nature of number of things like insured
property, the moral hazard of the insured himself, construction and location of premises,
safety measures (e.g. watchmen, burglar alarm), previous claims experience etc.
4. Which of the below is covered under a money insurance policy?
I. Shortage due to error or omission
II. Loss of cash from ones premises due to burglary
III. Loss of money that has been entrusted to other than authorized person
IV. Riot strike and terrorism
Loss of cash from ones premises due to burglary is covered under a money insurance policy.
Riot strike and terrorism can be covered as an extension by paying an extra premium
5. Fidelity guarantee insurance indemnifies ________________.
I. Employers against the financial loss suffered by them due to fraud or dishonesty of their
employees
II. employees against the financial loss suffered by them due to fraud or dishonesty of
their employer
Page | 25
III. Employees and employers against the financial loss suffered by them due to fraud or
dishonesty of third party
IV. Shareholders against the financial loss suffered by them due to fraud or dishonesty of
the company management
A fidelity guarantee insurance policy indemnifies employers against the financial loss suffered
by them due to fraud or dishonesty of their employees.
6. Which of the below can be covered under a bankers indemnity insurance policy?
I. Money securities lost or damaged whilst within the premises due to fire
II. Forgery or alteration of cheques
III. Dishonesty of employees with reference to money
A bankers indemnity insurance policy can cover: money securities lost or damaged whilst
within the premises due to fire, forgery or alteration of cheques, dishonesty of employees
with reference to money.
7. In case of a Jewelers Block Policy, damage to property insured when it is in transit by
registered parcel will be covered under ____________.
I. Section I
II. Section II
III. Section III
IV. Section IV
In case of a Jewelers Block Policy, damage to property insured when it is in transit by
registered parcel will be covered under Section III.
8.
Delay in start-up policy is also known as ______________.

I. Machinery Loss of Profits cover
II. Advance Loss of Profits cover
III. Contractors All Risk cover
IV. Contractors Plant & Machinery cover

Delay in start-up policy is also known as Advance Loss of Profit cover.
9. Which of the following is not covered under Industrial All Risks insurance?
I. Fire and special perils as per fire insurance practice
II. Larceny
III. Machinery breakdown
IV. Electronic equipment
Larceny is not covered under Industrial All Risks insurance
Page | 26
10. Which branch of insurance offers cover against war perils?

I. Marine policies
II. Aviation policies
III. Both of the above
Marine and aviation is the only branch of insurance that offer cover against war perils.
11. Under the Public Liability Insurance Act, 1991, how much is the compensation payable for
actual medical expenses?
I. Rs. 6,250
II. Rs, 12,500
III. Rs. 25,000
IV. Rs. 50,000
Under the Public Liability Insurance Act, 1991, the compensation payable for actual medical
expenses is Rs. 12,500.
12. In Engineering insurance CAR stands for
I. Motor Car
II. Contractors All Risks
III. Companys All Risks
IV. Companies All Requirements
In Engineering insurance CAR stands for Contractors All Risks.
13. An employer insures himself from dishonest act of his employees by _________
I. Employees compensation policy
II. Public Liability Insurance policy
III. Fidelity Guarantee Insurance policy
IV. Declaration policy.
An employer insures himself from dishonest act of his employees by Fidelity Guarantee
Insurance policy.
14. _________ refers to the body of the ship.
I. Hull
II. Cargo
III. Piracy
IV. Jettison
Hull refers to the body of the ship.
15. Policy which covers loss or damage to aircraft is ______________.

Page | 27
I. Statutory liability
II. Property insurance
III. Aviation insurance
IV. Money insurance
Policy which covers loss or damage to aircraft is aviation insurance.
16. Fire Insurance Policy does not cover damage to property even as add-on cover due
to___________.
I. Floods
II. Earthquake
III. Fire
IV. Bombing due to war
Fire Insurance Policy does not cover damage to property even as add-on cover, due to
bombing or war.
17. Consequential Loss (Fire Policy) covers:
I. Loss of profit due to damage to factory
II. Loss of Goodwill
III. Material wear & tear in machinery
IV. Losses due to foreign exchange fluctuations
Consequential Loss (Fire Policy) covers loss of profit due to damage to factory.
18. Premium in Burglary depends on:
I. Security measures
II. Location of Premises
III. Nature of property
Premium in burglary depends on security measures, location of premises, nature of property
19. Contractors All Risk Policy is a variation of:
I. Fire Insurance
II. Life Insurance
III. Engineering Insurance
IV. Marine Insurance
Contractors All Risk Policy is a variation of Engineering Insurance.
20. Employees Compensation Policy is a type of
I. Liability Insurance
II. Fire Insurance
III. Marine Cargo Insurance
Page | 28
IV. Engineering Insurance

Employees Compensation Policy is a type of Liability Insurance.
21. Money Insurance Policy covers:
I. Cash in hand
II. Money invested in Mutual Fund
III. Money lying in Saving Bank
IV. Money deposited with post office.
Money insurance policy covers cash in hand.
Page | 29
CHAPTER 9
CLAIMS PROCEDURE
1. Which of the following activities would not be categorised under professional settlement
of claims?
I. Seeking information relating to the cause of the loss
II. Approaching the claim with a prejudice
III. Ascertaining whether the loss was a result of an insured peril
IV. Quantifying the amount payable under the claim
Professional settlement of claims does not involve approaching a claim with prejudice.
2. Raj is involved in a car accident. His car is insured under a motor insurance policy. Which
among the following is the most appropriate thing for Raj to do?
I. Notify the insurer of the loss as soon as reasonably possible
II. Notify the insurer at the time of insurance renewal
III. Damage the car further so as to receive a bigger compensation
IV. Ignore the damage
A claim needs to be notified as soon as reasonably possible.
3. Compare claims investigation and claims assessment.
I. Both claims investigation and assessment are the same thing
II. Investigation tries to determine the validity of the claim whereas assessment is more
concerned with the cause and extent of the loss
III. Assessment tries to determine the validity of the claim whereas investigation is more
concerned with the cause and extent of the loss
IV. Investigation is done before the claim is paid and assessment is done after the claim is
paid
Investigation tries to determine the validity of the claim whereas assessment is more
concerned with the cause and extent of the loss.
4. Who is the licensing authority for surveyors?
I. Surveyor Association of India
II. Surveyor Regulatory and Development Authority
III. Insurance Regulatory and Development Authority
IV. Government of India
IRDA is the licensing authority for surveyors.
5. Which among the following documents is most likely to be requested while examining a
cyclone damage claim?
I. Coroners report
II. Report from Fire Brigade
III. Police report
Page | 30
IV. Report from Meteorological Department

Report from Meteorological Department is most likely to be requested while examining a
cyclone damage claim.
6. Under which principle can the insurer assume the rights of the insured in order to recover
from a third party the loss paid under a policy?
I. Contribution
II. Discharge
III. Subrogation
IV. Indemnity
Under the principle of subrogation the insurer can assume the rights of the insured in order to
recover from a third party the loss paid under a policy.
7. If the insurer decides that a certain loss is not payable because it is not covered under the
policy then who decides on such matters?
I. Insurers decision is final
II. Umpire
III. Arbitrator
IV. Court of Law
If the insurer decides that a certain loss is not payable because it is not covered under the
policy then such matters will be decided in the Court of Law.
8. Intimation of loss is to be made:
I. at the exact time of the loss
II. after 15 days
III. as soon as reasonably possible
IV. any time after the loss
Intimation of loss is to be made as soon as reasonably possible.
9. Investigation of loss is done by:
I. unlicensed surveyor
II. licensed and qualified surveyor
III. insureds representative
IV. any person with a degree in engineering
Investigation of loss is done by licensed and qualified surveyor.
10. For personal accident claims, report of________ is necessary.
I. Surveyor
II. Doctor
III. Police
Page | 31
IV. Coroner
For personal accident claims report of a Doctor is necessary.
11. Independent surveyors are required for claims above_______ as per the Insurance Act.
I. Rs. 40,000
II. Rs. 15,000
III. Rs. 20,000
IV. Rs. 25,000
Independent surveyors are required for claims above Rs 20000 as per the Insurance Act.
12. Claims assessed outside the country in case of travel insurance polices are assessed by:
I. Indian surveyors
II. Local surveyors in the country of loss
III. Insurers own employees
IV. Claims settling agents named in the policy
Claims assessed outside the country in case of travel insurance policies are assessed by claims
settling agents named in the policy.
13. In case of a fire claim, a report from the fire brigade:
I. is not required
II. is optional for the insured
III. is necessary
IV. is part of the police report
In case of a fire claim, a report from the fire brigade is required
14. What is TAT?
I. Time and Turn
II. Till a Time
III. Time and Tide
IV. Turnaround Time
TAT is turnaround time.
15. On payment of loss, salvage belongs to:
I. Surveyors
II. Insured
III. Insurer
IV. Local authorities
On payment of loss, salvage belongs to insurer.
Page | 32
16. Arbitration is a claim settlement process done ______________.

I. in the court of law
II. by a group of surveyors
III. by arbitrator(s) chosen by the parties involved
IV. arbitrarily by the insurance companys employees
Arbitration is a claim settlement process done by arbitrator(s) chosen by the parties involved.
17. Insurers under right of subrogation are allowed to recover the loss paid from:
I. Shipping companies only
II. Railways and road carriers only
III. Airlines and Port Trusts only
IV. Shipping companies and railway and road carriers and airlines and port trusts
Insurers under right of subrogation are allowed to recover the loss paid from shipping
companies and railway and road carriers and airlines and port trusts.
Page | 33
CHAPTER 10
CUSTOMER SERVICE
1. What is meant by customer lifetime value?
I. Sum of costs incurred while servicing the customer over his lifetime
II. Rank given to customer based on business generated
III. Sum of economic benefits that can be achieved by building a long term relationship
with the customer
IV. Maximum insurance that can be attributed to the customer
Sum of economic benefits that can be achieved by building a long term relationship with the
customer is referred to as customer lifetime value.
2. Identify the scenario where a debate on the need for insurance is not required.
I. Property insurance
II. Business liability insurance
III. Motor insurance for third party liability
IV. Fire insurance
Motor insurance for third party liability is mandatory by law and hence a debate on its need is
not required.
3. As per the Consumer Protection Act, 1986, who cannot be classified as a consumer?
I. Hires goods / services for personal use
II. A person who buys goods for resale purpose
III. Buys goods and services for a consideration and uses them
IV. Uses the services of another for a consideration
As per the Consumer Protection Act, 1986, a person who buys goods for resale purpose cannot
be classified as consumer.
4. What does not go on to make a healthy relationship?
I. Attraction
II. Trust
III. Communication
IV. Scepticism
Scepticism does not go on to make a healthy relationship.
5. Which among the following is not an element of active listening?
I. Paying good attention
II. Being extremely judgemental
III. Empathetic listening
IV. Responding appropriately
Page | 34

Being extremely judgemental is not an element of active listening.
6. Which among the following is not a characteristic of ethical behaviour?
I. Making adequate disclosures to enable the clients to make an informed decision
II. Maintaining confidentiality of clients business and personal information
III. Placing self-interest ahead of clients interests
IV. Placing clients interest ahead of self interest
Placing self-interest ahead of clients interests is not ethical behaviour.
7. _____________ is not a tangible good.
I. House
II. Insurance
III. Mobile Phone
IV. A pair of jeans
Insurance is not a tangible good.
8. _______________ is not an indicator of service quality.
I. Cleverness
II. Reliability
III. Empathy
IV. Responsiveness
Cleverness is not an indicator of service quality.
9. In India _______________ insurance is mandatory.
I. Motor third party liability
II. Fire insurance for houses
III. Travel insurance for domestic travel
IV. Personal accident
Motor third party liability insurance is mandatory in India.
10. One of the methods of reducing insurance cost of an insured is __________
I. Reinsurance
II. Deductible
III. Co-insurance
IV. Rebate
One of the methods of reducing insurance cost of an insured is the deductible clause in a
policy.
11. A customer having complaint regarding his insurance policy can approach IRDA through
Page | 35
I. IGMS
II. District Consumer Forum
III. Ombudsman
IV. IGMS or District Consumer Forum or Ombudsman
A customer having complaint regarding his insurance policy can approach IRDA through IGMS.
12. Consumer Protection Act deals with:
I. Complaint against insurance companies
II. Complaint against shopkeepers
III. Complaint against brand
IV. Complaint against insurance companies, brand and shopkeepers
Consumer Protection Act deals with complaint against insurance companies, shopkeepers and
brands.
13. ___________ has jurisdiction to entertain matters where value of goods or services and
the compensation claim is up to 20 lakhs
I. High Court
II. District Forum
III. State Commission
IV. National Commission
District Forum has jurisdiction to entertain where value of goods or services and the
compensation claim is up to 20 lakhs.
14. In customer relationship the first impression is created:
I. By being confident
II. By being on time
III. By showing interest
IV. By being on time, showing interest and being confident
In customer relationship the first impression is created by being confident, on time and by
showing interest.
15. Select the correct statement:
I. Ethical behaviour is impossible while selling insurance
II. Ethical behaviour is not necessary for insurance agents
III. Ethical behaviour helps in developing trust between the agent and the insurer
IV. Ethical behaviour is expected from the top management only
Ethical behaviour helps in developing trust in the agent and the insurer.
16. Active Listening involves:
I. Paying attention to the speaker
Page | 36
II. Giving an occasional nod and smile

III. Providing feedback
IV. Paying attention to the speaker, giving an occasional nod and smile and providing
feedback
Active Listening involves paying attention to the speaker, giving an occasional nod and smile
and providing feedback.
Page | 37
CHAPTER 11
INSURANCE CAREER PROSPECTS
1. Which among the following are the two basic qualities that make a good sales person?
I. Empathy and ego drive
II. Prejudice and loathing
III. Pride and honesty
IV. Scepticism and perseverance
Empathy and ego drive are the two basic qualities that make a good sales person.
2. Which among the following is the most likely to contain the IRDA stipulated 50 hours
training to help prospects clear the IRDA examination?
I. Process training
II. Product training
III. Pre-recruitment training
IV. Sales training
Pre-recruitment training is the most likely to contain the IRDA stipulated 50 hours training to
help prospects clear the IRDA examination.
3. ____________ is a representative of the insurance company and is governed by the
principal agent relationship.
I. Insurance agent
II. Broker
III. Banks
IV. Underwriter
Insurance agent is a representative of the insurance company and is governed by the principal
agent relationship.
4. _________________ is collaboration between banks and insurers to distribute insurance
products.
I. Bancassurance
II. Agent
III. Broker
IV. Insurance company
Bancassurance is collaboration between banks and insurers to distribute insurance products.
5. _____________ determines whether the proposal should be admitted, whether risk can be
accepted.
I. Agent
II. Insurer
III. Underwriter
Page | 38
IV. Insured
Underwriter determines whether the proposal should be admitted, whether risk can be
accepted.
6. Broker represents:
I. One insurance company
II. Multiple insurance companies
III. Insurance Regulatory and Development Authority
IV. Customer
An insurance broker can represent multiple insurance companies.
7. _________________ cannot become corporate agent.
I. A co-operative society
II. An individual
III. A bank
IV. A broker
An individual cannot become a corporate agent.
8. Insurance brokers are licensed by:
I. Insurance Regulatory & Development Authority
II. Reserve Bank of India
III. Security Exchange Board of India
IV. Government of India
Insurance Brokers are licensed by the Insurance Regulatory & Development Authority.
9. The following is not a benefit of insurance agency.
I. No limit on income from commission
II. Fixed salary income
III. Freedom to decide working hours
IV. Social prestige
Fixed salary income is not a benefit of insurance agency.
10. Following is required in insurance agency career for achieving success:
I. Will to excel
II. Empathy towards customer
III. Truthfulness
IV. Will to excel, empathy towards customer and truthfulness
Page | 39
Will to excel, empathy towards customer and truthfulness is required for a successful
insurance agency career.
11. Following is not an insurance intermediary:
I. Corporate agent
II. Share broker
III. Insurance broker
IV. Insurance agent
Share broker is not an insurance intermediary.
12. An agent can earn upto:
I. 20,000 per month
II. Rs. 10,00,000 per month
III. Rs.1 Crore per year
IV. Unlimited amount based on her efforts
An agent can earn unlimited amounts of money based on her efforts.
Page | 40

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What are the different types of insurance intermediaries?

What are the different types of insurance intermediaries?

What are the qualities required for a successful insurance agency career?

What are the qualities required for a successful insurance agency career?

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IV. one decides to bear the risk and its effects

6. ______________ means spreading ones investment in different kinds of assets.

III. Legal hazard

The correct option is III.

12. Prospecting in an insurance sale is

6. Moral hazard means:

The correct option is II.

I. A warranty is a condition which is implied without being stated in the policy

10. A document which provides an evidence of contract of insurance is called________

III. Has to be kept in the car always

12. The purpose of deductible clause is to:

II. Sanitary fittings

Health insurance covers all of the above: pre-hospitalisation treatment, post-hospitalisation

Delay in start-up policy is also known as ______________.

The correct option is II.

10. Which branch of insurance offers cover against war perils?

15. Policy which covers loss or damage to aircraft is ______________.

IV. Engineering Insurance

IV. Report from Meteorological Department

16. Arbitration is a claim settlement process done ______________.

The correct option is II.

II. Giving an occasional nod and smile

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