QUESTION BANK

Chapter – 1 Introduction to Insurance

1. Which among the following is not a function of insurance?

(a) Risk mitigation (b) Risk transfer
(c) Risk tracking (d) Risk reduction

2. Chance of loss is referred to as _________.

(a) Luck (b) Risk
(c) Bad luck (d) Peril

3. Insurance deductible is an example of ___________.

(a) Risk mitigation (b) Risk avoidance
(c) Risk transfer (d) Risk retention

4. Cost of risk is determined by ________________.

(a) Probability only (b) Impact only
(c) Probability and impact (d) Timing of risk

5. How does insurance help in easing access to credit?

(a)Insurer provides free credit
(b) Banks lend easily if an application is backed by insurance
(c) Person who can pay insurance is assumed to be creditworthy
(d) Regulations mandate provision of credit to the insured

6. Lloyds Coffee House is regarded as the place where insurance started the way it is practised today. Lloyds is
located in __________.
(a) Bangalore (b) Singapore
(c) London (d) Dubai

7. Risk transfer through risk pooling is called________.

(a) Savings (b) Investments
(c) Insurance (d)Transfer

8. The measures to reduce chances of occurrence of risk are known as _____.

(a) Risk retention (b) Loss prevention
(c) Risk transfer (d) Risk avoidance

9. By transferring risk to insurer, it becomes possible:

(a) To enjoy from floods (b) To enjoy and make money from insurance
(c) To enjoy a fire in the factory (d) To enjoy peace of mind and plan one’s
business more effectively
10. Origins of modern insurance business can be traced to________.
(a) Bottomry (b) Lloyds
(c) Rhodes (d) Malhotra Committee

11. In the insurance context „risk retention‟ indicates a situation where__________.

(a) possibility of loss or damage is not there (b) loss producing event has no value
(c) property is covered by insurance (d) one decides to bear the risk and its effects

12. Which of the following statement is true?

(a) Insurance protects the asset (b) Insurance prevents its loss
(c) Insurance reduces possibilities of loss (d) Insurance pays when there is loss of 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?
(a) Rs.100/- (b) Rs.200/-
(c) Rs.80/- (d) Rs.400/-

14. Which of the following statements is true?

(a) Insurance is a method of sharing the losses of a ‘few’ by the ‘many’

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(b) Insurance is a method of transferring the risk of an individual to another individual

(c) Insurance is a method of sharing the losses of „many‟ by a few
(d) Insurance is a method of transferring the gains of a few to the many

15. Before acceptance of a risk, the insurer arranges a survey and inspection of the property. Why?
(a) To assess the risk for rating purposes
(b) To find out how the insured purchased the property
(c) To find out whether other insurers have also inspected the property
(d) To find out whether neighbouring property also can be insured
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Chapter – 2 Principles of Insurance

1. Which one of the following does not represent an insurable risk?

(a) Fire (b) Stolen goods
(c) Burglary (d) Loss of goods due to ship capsizing

2. Which among the following cannot be an element in a valid insurance contract?

(a) Offer and acceptance (b) Coercion
(c) Consideration (d) Legality

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?
(a) Pneumonia (b) Horse
(c) Horse riding accident (d) Bad luck

4. Moral hazard means:

(a) Dishonesty or character defects in an individual (b) Honesty and values in an individual
(c) Risk of religious beliefs (d) Hazard of the property to be insured

5. Risk indicates:
(a) Fear of unknown (b) Chance of loss
(c) Disturbances at public place (d) Hazard

6. ______________ means spreading one‟s investment in different kinds of assets.

(a) Pooling (b) Diversification
(c) Gambling (d) Dynamic risk

7. _____________ is not an example of an asset.

(a) House (b) Sunlight
(c) Plant and machinery (d) Motor car

8. ______________ is not an example of risk.

(a) Damage to car due to accident (b) Damage of cargo due to rain water
(c) Damage to car tyre due to wear and tear (d) Damage to property due to fire

9. Earthquake is an example of:

(a) Catastrophic risk (b) Dynamic risk
(c) Marginal risk (d) Speculative risk

10. Select the most appropriate logical equivalence for the statement.
Statement: Insurance cannot protect an asset from loss or damage.
(a) True (b) False
(c) Partially true (d) Not necessarily true

11. __________________ means transfer of all rights and remedies, with respect to the subject matter of insurance,
from insured to insurer.
(a) Contribution (b) Subrogation
(c) Legal hazard (d) Risk pooling

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12. An example of a fact which need not be disclosed unless asked for is ______________ by the insurer.
(a) Age of the insured (b) Presence of fire extinguisher
(c) Heart ailment (d) Other insurance details

13. ________________ is a wrong statement made during negotiation of a contract.

(a) Misrepresentation (b) Contribution
(c) Offer (d) Representation
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Chapter – 3 Marketing & Selling Insurance

1. Which among the following is not an essential component of the sales process?
(a) Goodwill (b) Buyer
(c) Seller (d) Product / Service

2. Which among the following activities can be classified as promotion?

(a) Product development (b) Quality control
(c) Product advertisement (d) Product benchmarking

3. Which among the following statements best describes a “Testimonial”?

(a) An endorsement from a satisfied customer (b) Test result for a product in a benchmarking test
(c) List of tests that a product must pass (d) Money required to test a product

4. General insurance could help in achieving all of the following objectives EXCEPT:
(a) Protection against loss to business premises
(b) Making windfall gains on the occurrence of a contingent event
(c) Protection against errors and omissions
(d) Protection against property losses

5. How can insurance penetration be determined?

(a) Ratio of insurance premiums to GDP (b) Ratio of insurance companies to the local population
(c) Ratio of insurance premium to per capita income (d) Ratio of subscribers to the insurance policies available

6. Classification of customers into various market segments, having common features is known as __
(a) Sales (b) Segmentation
(c) Marketing (d) Prospecting

7. The key to successful closing lies in helping the prospect to say ________.
(a) No (b) Don‟t know
(c) Yes (d) Maybe

8. Which of the following is not part of sales process?

(a) Prospecting (b) Sales interview
(c) Loss assessment (d) Closing

9. _______________ is not among the P‟s of marketing.

(a) Price (b) Product
(c) Protection (d) Place

10. Insurance is part of ___________ industry.

(a) Manufacturing (b) Financial services
(c) Consumer goods (d) Share market

11. Negotiation is a process _____________.

(a) To win some how (b) To give discounts to the customer
(c) To reach a win-win situation (d) To argue and defeat the prospect

12. Prospecting in an insurance sale is

(a) Gathering the names of people who may be interested in insurance
(b) Preparing a list of all the persons in the city
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(c) Enlisting all the policyholders of the branch office

(d) Preparing list of all the agents in the neighbourhood

13. Need-gap analysis involves, finding about prospect:

(a) Identifying the areas where the prospect needs insurance protection
(b) Identifying people to work as insurance agents
(c) Identifying how much assets a prospect has
(d) Indentifying the poverty level of the prospects

14. Insurance density is:

(a) Life insurance premium (b) Ratio of premium to income
(c) Premium per capita (d) Coverage per capita

15. Cold Calling is:

(a) Meeting customers in winter (b) Meeting customers when they are suffering from cold
(c) Meeting people unannounced (d) Meeting customer after fire was extinguished

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Chapter – 4 Legal And Regulatory Aspects Of Insurance Agency

1. What is the primary purpose of insurance regulations?

(a) To generate fee income (b) Protect the interests of policyholders
(c) To settle customer disputes (d) To control the market share of private insurers

2. Which among the following activities is prohibited as per the provisions of Insurance Act, 1938?
(a) Keeping aside reserves to meet solvency requirements
(b) Using rebates as a tool to sell insurance policies
(c) Prospecting customers
(d) Limiting management expenses

3. Insurance agents who hold licence to act as an agent for a life insurer and a general insurer are called
(a) Common insurance agents (b) Composite insurance agents
(c) Multiple insurance agents (d) General insurance agents
4. Which of the below intermediary is not involved in procurement of business?
(a) Insurance brokers (b) Individual agents
(c) Surveyors (d) Corporate agents

5. What does the term “Caveat Emptor” mean?

(a) Buyer beware (b) Seller beware
(c) Insurance buyer beware of miselling (d) Insurance agent beware of customer requirement

6. Moral hazard means:

(a) Dishonesty or character defects in an individual (b) Honesty and values in an individual
(c) Risk of religious beliefs (d) Hazard of the property to be insured

7. Insurance agent represents the ______________.

(a) Insurance company (b) Sub-agent
(c) Co-agent (d) Broker

8. Appointment as an insurance agent is done by __________.

(a) General Insurance Corporation (GIC)
(b) Insurance Regulatory & Development Authority of India (IRDAI)
(c) By the respective insurance company
(d) Finance Ministry

9. Identify the statement which is not correct. Insurance agent should __________.
(a) Indicate the scale of commission if asked by the customer
(b) Share the commission by way of rebate
(c) Disclose his status with the Insurer on demand

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(d) Indicate the premium to be charged

10. If an agent is found guilty of criminal misappropriation, the designated person will _____
(a) Terminate the agency appointment. (b) Issue a duplicate appointment letter
(c) Renew the existing appointment (d) Take some fees from the agent

11. Minimum qualification required for an insurance agent is _______

(a) Graduate (b) As per Board Approved Policy of each Insurer
(c) Post-Graduate (d) 7th

12. ________________ may deal with all Life Insurance Companies and/or general insurance companies.
(a) Agent (b) Broker
(c) Corporate agent (d) Retail agent

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Chapter – 5 Documentation

1. What is the significance of the principle of contribution?

(a) It ensures that the insured also contributes a certain portion of the claim along with the insurer
(b) 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
(c) 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
(d) It ensures that the premium is contributed by the insured in equal installments over the year.

2. As per guidelines, an insurance company has to process an insurance proposal within __________.
(a) 7 days (b) 15 days
(c) 30 days (d) 45 days

3. In case the premium payment is made by cheque, then which of the below statement will hold true?
(a) The risk may be assumed on the date on which the cheque is posted
(b) The risk may be assumed on the date on which the cheque is deposited by the insurance company
(c) The risk may be assumed on the date on which the cheque is received by the insurance company
(d) The risk may be assumed on the date on which the cheque is issued by the proposer

4. Which of the below statement is true with regards to cover notes?

(a) Cover notes are predominantly used in life insurance
(b) Cover notes are predominantly used in all classes of general insurance
(c) Cover notes are predominantly used in health insurance
(d) 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?

(a) A warranty is a condition which is implied without being stated in the policy
(b) A warranty is a condition expressly stated in the policy
(c) A warranty is a condition expressly stated in the policy and communicated to the insured separately and not as
part of the policy document
(d) If a warranty is breached, the claim can still be paid if it is not material to the risk

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 __________.
(a) Warranty (b) Endorsement
(c) Alteration (d) Modifications are not possible

7. Which of the below statement is correct with regards to renewal notice?

(a) 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
(b) As per regulations there is a legal obligation on insurers to send a renewal notice to insured, 15 days before the
expiry of the policy

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(c) As per regulations there is a legal obligation on insurers to send a renewal notice to insured, 7 days before the
expiry of the policy
(d) 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

(a) Sum insured (b) Premium
(c) Surrender value (d) Amount of loss

9. _______________ is the consideration or price paid by insured under a contract

(a) Claim amount (b) Surrender value
(c) Maturity amount (d) Premium

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

(a) Policy (b) Cover note
(c) Endorsement (d) Certificate of insurance

11. The duty of disclosure arises

(a) Prior to inception of the policy (b) After inception of the policy
(c) Prior to inception and continues during the policy (d) There is no such duty

12. Material fact

(a) Is the value of all material covered in a policy
(b) Not important for assessing the risk
(c) Is important as it influences the decision of the underwriter
(d) Is not important as it has no bearing on the decision of the underwriter

13. Fire proposal seeks to know

(a) Process of manufacture (b) Details of material stored
(c) Construction of building (d) All the above

14. Premium cannot be received

(a) In cash (b) By cheque
(c) By promissory note (d) By credit card

15. The certificate of Motor Insurance

(a) Is not mandatory (b) Has to be kept with self always
(c) Has to be kept in the car always (d) Has to be kept in the bank locker

16. A warranty
(a) Is a condition expressly stated in the policy (b) Has to be complied with
(c) Both a and b (d) None of the above

17. Renewal Notice for Motor insurance is issued by

(a) The Insured before expiry of the policy (b) The Insurer before expiry of the policy
(c) The Insured after expiry of the policy (d) The Insurer after expiry of the policy

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Chapter 6 Theory and practice of premium rating

1. Identify the two factors that affect insurance ratemaking.

(a) Probability and severity of risk (b) Source and nature of risk
(c) Source and timing of risk (d) Nature and impact of risk

2. What is pure premium?

(a) Premium sufficiently big enough to pay for losses only
(b) Premium applicable to marginal members of the society
(c) Premium after loading for administrative costs

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(d) Premium derived from the most recent loss experience period

3. What is expected of an agent when she detects a moral hazard?

(a) Continue with the insurance as before (b) Report the same to the insurer
(c) Ask for a share in the claims (d) Turn a blind eye

4. Suggest an insurance scheme for a doctor to protect him from any claims of negligence against him.
(a) Personal accident insurance (b) Liability insurance
(c) Marine hull insurance (d) Health insurance

5. _____________ decides whether to accept or not to accept the risk.

(a) Assured (b) Underwriter
(c) Agent (d) Surveyor

6. _______________ is the price of a given unit of insurance.

(a) Rate (b) Premium
(c) Sum Assured (d) Bonus

7. ____ is the maximum amount that an insurance company will indemnify to someone who files a claim.
(a) Sum insured (b) Premium
(c) Rider (d) Benefits

8. ______________ is not a source of information for underwriter.

(a) Annual accounts of a proposer (b) Pre-acceptance risk survey of the asset
(c) Proposal form (d) Registration certificate of insurer
9. Hazards are:
(a) Factors that increase the impact of losses
(b) Factors that increases the frequency of loss
(c) Factors that increase the impact and severity of losses
(d) Factors that decrease the impact and severity of losses

10. Which of the following is true?

Physical Hazards:
(a) Are not important for rate making
(b) Cannot be ascertained
(c) Can be calculated from the balance sheet
(d) Can be ascertained from information given in a proposal form

11. In motor insurance one of the warranties is:

(a) The vehicle should be washed daily
(b) The vehicle should not be used for speed testing
(c) The vehicle should not be used for carrying luggage for personal use
(d) The vehicle should not be run more than 200 km per day.

12. The purpose of deductible clause is to:

(a) To avoid claim payment
(b) To eliminate payment of small claims
(c) To harass the policyholder
(d) To increase the premium

13. Installation of sprinkler system in the premises:

(a) Increases risk
(b) Decreases the risk
(c) Neither increases nor decreases risk
(d) Increases risk of hooding

14. Insured‟s declared value in motor insurance includes:

(a) Registration
(b) Manufacturer‟s cost price
(c) Manufacturer’s selling price

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(d) Arbitrary price component

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Chapter 7 Personal and Retail insurance

1. Which of the below statement is correct with regards to a householder‟s insurance policy?
(a) 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.
(b) A comprehensive policy that tends to offer coverage to most perils; may be purchased as a less expensive
alternative to a named peril policy.
(c) A named peril policy or comprehensive policy comes at the same price.
(d) With regards to a householder‟s policy, only a named peril policy can be bought and comprehensive policies are
not available.

2. 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?
(a) Fixed plate glass (b) Sanitary fittings
(c) Neon signs (d) All of the above

3. Motor insurance should be taken in whose name?

(a) In the name of the vehicle owner whose name is registered with Regional Transport Authority
(b) 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
(c) In the name of any family member of the vehicle owner, including the vehicle owner, subject to approval from the
Regional Transport Authority
(d) 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.

4. In householder‟s insurance
(a) Gold and silver ornaments are covered (b) Content‟s of one‟s shop is covered
(c) Cars owned by the family are covered (d) Parcels sent by post are covered during transit.

5. Householder‟s insurance covers

(a) Only the structure of the home (b) Only the Contents of the home
(c) Both the structure and contents (d) Both Structure and contents only when insured is not
at home

6. In shop keeper‟s insurance, which of the following are not covered?

(a) Machinery breakdown (b) Malicious damage
(c) Business interruption (d) Willful destruction by insured

7. In shop keeper‟s insurance which of the following are usually not covered
(a) Money in till/counter at business premises
(b) Money in transit from bank to business premises
(c) Money in safe at business premises
(d) Money carried by customer to business premises.

8. Shop insurance covers

(a) Dishonest acts of employees (b) Dishonest acts of insured
(c) Dishonest acts of customers (d) Dishonest acts of money lenders

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Chapter 8 Commercial insurance

1. A fire policy for commercial risks covers the perils of ________

(a) Explosion (b) Implosion
(c) Both of the above (d) None of the above

2. A business interruption insurance policy can be taken only in conjunction with ____________.

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(a) Standard fire and special perils policy (b) Standard fire and marine policy
(c) Standard and special perils policy (d) Standard Engineering and marine policy

3. The premium for burglary policy depends on ______________.

(a) Nature of insured policy (b) Moral hazard of the insured himself
(c) Construction and location of the premises (d) All of the above

4. Which of the below is covered under a money insurance policy?

(a) Shortage due to error or omission
(b) Loss of cash from one’s premises due to burglary
(c) Loss of money that has been entrusted to other than authorized person
(d) Riot strike and terrorism

5. Fidelity guarantee insurance indemnifies ________________.

(a) Employers against the financial loss suffered by them due to fraud or dishonesty of their employees
(b) Employees against the financial loss suffered by them due to fraud or dishonesty of their employer
(c) Employees and employers against the financial loss suffered by them due to fraud or dishonesty of third party
(d) Shareholders against the financial loss suffered by them due to fraud or dishonesty of the company management

6. Which of the below can be covered under a bankers indemnity insurance policy?
(a) Money securities lost or damaged whilst within the premises due to fire
(b) Forgery or alteration of cheques
(c) Dishonesty of employees with reference to money
(d) All of the above

7. In case of a Jeweller‟s Block Policy, damage to property insured when it is in transit by registered parcel will be
covered under ____________.
(a) Section I (b) Section II
(c) Section III (d) Section IV

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

(a) Machinery Loss of Profits cover (b) Advance Loss of Profits cover
(c) Contractors All Risk cover (d) Contractors Plant & Machinery cover
9. Which of the following is not covered under Industrial All Risks insurance?
(a) Fire and special perils as per fire insurance practice (b) Larceny
(c) Machinery breakdown (d) Electronic equipment

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

(a) Marine policies (b) Aviation policies
(c) Both of the above (d) None of the above

11. Under the Public Liability Insurance Act, 1991, how much is the compensation payable for actual medical
expenses?
(a) Rs. 6,250 (b) Rs, 12,500
(c) Rs. 25,000 (d) Rs. 50,000

12. In Engineering insurance CAR stands for

(a) Motor Car (b) Contractors All Risks
(c) Company‟s All Risks (d) Companies All Requirements

13. An employer insures himself from dishonest act of his employees by _________
(a) Employees compensation policy (b) Public Liability Insurance policy
(c) Fidelity Guarantee Insurance policy (d) Declaration policy.

14. _________ refers to the body of the ship.

(a) Hull (b) Cargo
(c) Piracy (d) Jettison

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

(a) Statutory liability (b) Property insurance

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(c) Aviation insurance (d) Money insurance

16. Fire Insurance Policy does not cover damage to property even as add-on cover due to___________.
(a) Floods (b) Earthquake
(c) Fire (d) Bombing due to war

17. Consequential Loss (Fire Policy) covers:

(a) Loss of profit due to damage to factory (b) Loss of Goodwill
(c) Material wear & tear in machinery (d) Losses due to foreign exchange fluctuations

18. Premium in Burglary depends on:

(a) Security measures (b) Location of Premises
(c) Nature of property (d) All of the above

19. Contractor‟s All Risk Policy is a variation of:

(a) Fire Insurance (b) Life Insurance
(c) Engineering Insurance (d) Marine Insurance

20. Employee‟s Compensation Policy is a type of

(a) Liability Insurance (b) Fire Insurance
(c) Marine Cargo Insurance (d) Engineering Insurance

21. Money Insurance Policy covers:

(a) Cash in hand (b) Money invested in Mutual Fund
(c) Money lying in Saving Bank (d) Money deposited with post office.

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Chapter 9 Health Insurance

1. Though the duration of cover for pre-hospitalization expenses would vary from insurer to insurer and is defined in
the policy, the most common cover is for ________ pre-hospitalization.
(a) Fifteen days (b) Thirty days
(c) Forty Five days (d) Sixty days

2. As per IRDA guidelines, a ________ grace period is allowed for renewal of individual health policies.
(a) Fifteen days (b) Thirty days
(c) Forty Five days (d) Sixty days

3. Which of the below statement is correct with regards to a hospitalization expenses policy?
(a) Only hospitalization expenses are covered
(b) Hospitalization as well as pre and post hospitalization expenses are covered
(c) Hospitalization as well as pre and post hospitalization expenses are covered and a lump sum amount is paid to the
family members in the event of insured‟s death
(d) Hospitalization expenses are covered from the first year and pre and post hospitalization expenses are covered
from the second year if the first year is claim free.

4. Identify which of the below statement is correct?

(a) Health insurance deals with morbidity
(b) Health insurance deals with mortality
(c) Health insurance deals with morbidity as well as mortality
(d) Health insurance neither deals with morbidity or mortality

5. Which of the below statement is correct with regards to cashless service provided in health insurance?
(a) It is an environment friendly go-green initiative started by insurance companies to promote electronic payments so
that circulation of physical cash notes can be reduced and trees can be saved.
(b) Service is provided free of cost to the insured and no cash is to be paid as the payment is made by the
Government to the insurance company under a special scheme
(c) All payments made by insured have to be made only through internet banking or cards as cash is not accepted by
the insurance company
(d) The insured does not pay and the insurance company settles the bill directly with the hospital

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6. Identify the correct full form of PPN with regards to hospitals in health insurance.
(a) Public Preferred Network (b) Preferred Provider Network
(c) Public Private Network (d) Provider Preferential Network

7. Identify which of the below statement is incorrect?

(a) An employer can take a group policy for his employees
(b) A bank can take a group policy for its customers
(c) A shopkeeper can take a group policy for its customers
(d) A group policy taken by the employer for his employees can be extended to include the family members of the
employees

8. Underwriting is the process of ___________.

(a) Marketing insurance products (b) Collecting premiums from customers
(c) Risk selection and risk pricing (d) Selling various insurance products

9. The principle of utmost good faith in underwriting is required to be followed by ___________.

(a) The insurer (b) The insured
(c) Both the insurer and the insured (d) The medical examiners

10. Insurable interest refers to ____________.

(a) Financial interest of the person in the asset to be insured
(b) The asset which is already insured
(c) Each insurer‟s share of loss when more than one company covers the same loss
(d) The amount of the loss that can be recovered from the insurer

11. Which of the following statements about medical underwriting is incorrect?

(a) It involves high cost in collecting and assessing medical reports.
(b) Current health status and age are the key factors in medical underwriting for health insurance.
(c) Proposers have to undergo medical and pathological investigations to assess their health risk profile.
(d) Percentage assessment is made on each component of the risk.

12. In a group health insurance, any of the individual constituting the group could anti-select against the insurer.
2) Group health insurance provides coverage only to employer-employee groups.

(a) Statement 1 is true and statement 2 is false (b) Statement 2 is true and statement 1 is false
(c) Statement 1 and statement 2 are true (d) Statement 1 and statement 2 are false

13. Which of the following factor does not affect the morbidity of an individual?
(a) Gender (b) Spouse job
(c) Habits (d) Residence location
14. According to the principle of indemnity, the insured is paid for __________.
(a) The actual losses to the extent of the sum insured
(b) The sum insured irrespective of the amount actually spent
(c) A fixed amount agreed between both the parties
(d) The actual losses irrespective of the sum assured

15. The first and the primary source of information about an applicant, for the underwriter is his ____
(a) Age proof documents (b) Financial documents
(c) Previous medical records (d) Proposal form

16. The underwriting process is completed when ___________________.

(a) All the critical information related to the health and personal details of the proposer are collected through the
proposal form
(b) All the medical examinations and tests of the proposer are completed
(c) The received information is carefully assessed and classified into appropriate risk categories
(d) The policy is issued to the proposer after risk selection and pricing.

17. Which of the following statements about the numerical rating method is incorrect?

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(a) Numerical rating method provides greater speed in the handling of a large business with the help of trained
personnel.
(b) Analysis of difficult or doubtful cases is not possible on the basis of numerical points without
medical referees or experts.
(c) This method can be used by persons without any specific knowledge of medical science.
(d) It ensures consistency between the decisions of different underwriters.

18. Who among the following is not a stakeholder in insurance claim process?
(a) Insurance company shareholders (b) Human Resource Department
(c) Regulator (d) TPA

19. Which of the following document is maintained at the hospital detailing all treatment done to an in-patient?
(a) Investigation report (b) Settlement sheet
(c) Case paper (d) Hospital registration certificate

20. The amount of provision made for all claims in the books of the insurer based on the status of the claims is known
as ________.
(a) Pooling (b) Provisioning
(c) Reserving (d) Investing

21. Which of the following documents are not required to be submitted for Permanent Total Disability claim?
(a) Duly completed Personal Accident claim form signed by the claimant.
(b) Attested copy of First Information Report if applicable.
(c) Permanent disability certificate from a civil surgeon or any equivalent competent doctors certifying the disability of
the insured.
(d) Fitness certificate from the treating doctor certifying that the insured is fit to perform his normal
duties.

22. ___________ are paid upfront by Assistance Company and later claimed from insurance company.
(a) Bail bond cases (b) Personal accident claims
(c) Overseas travel insurance claims (d) Untenable claims

23. Who among the following is considered as primary stakeholder in insurance claim process?
(a) Customers (b) Owners
(c) Underwriters (d) Insurance agents/brokers

24. Girish Saxena‟s insurance claim was denied by insurance company. In case of a denial, what is the option available
to Girish Saxena, apart from the representation to the insurer?
(a) To approach Government (b) To approach legal authorities
(c) To approach insurance agent (d) Nothing could be done in case of case denial

25. During investigation, of a health insurance claim presented by Rajiv Mehto, insurance company finds that instead
of Rajiv Mehto, his brother Rajesh Mehto had been admitted to hospital for treatment. The policy of Rajiv Mehto is not
a family floater plan. This is an example of ___________fraud.
(a) Impersonation (b) Fabrication of documents
(c) Exaggeration of expenses (d) Outpatient treatment converted to in-patient / hospitalization
26. Under which of the following condition, is domiciliary hospitalization is covered in a health insurance policy?
(a) The condition of the patient is such that he/she can be removed to the Hospital/Nursing Home , but prefer not to
(b) The patient cannot be removed to Hospital/Nursing Home for lack of accommodation therein
(c) The treatment can be carried out only in hospital/Nursing home
(d) Duration of hospitalization is exceeding 24 hours

27. Which of the following codes capture the procedures performed to treat the illness?
(a) ICD (b) DCI
(c) CPT (Current Procedure Terminology) (d) PCT

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Chapter 10 Claims Procedure

1. Which of the following activities would not be categorised under professional settlement of claims?

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(a) Seeking information relating to the cause of the loss

(b) Approaching the claim with a prejudice
(c) Ascertaining whether the loss was a result of an insured peril
(d) Quantifying the amount payable under the claim

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?
(a) Notify the insurer of the loss as soon as reasonably possible
(b) Notify the insurer at the time of insurance renewal
(c) Damage the car further so as to receive a bigger compensation
(d) Ignore the damage

3. Compare claims investigation and claims assessment.

(a) Both claims investigation and assessment are the same thing
(b) Investigation tries to determine the validity of the claim whereas assessment is more concerned
with the cause and extent of the loss
(c) Assessment tries to determine the validity of the claim whereas investigation is more concerned with the cause
and extent of the loss
(d) Investigation is done before the claim is paid and assessment is done after the claim is paid

4. Who is the licensing authority for surveyors?

(a) Surveyor Association of India
(b) Surveyor Regulatory and Development Authority
(c) Insurance Regulatory and Development Authority of India (IRDAI)
(d) Government of India

5. Which among the following documents is most likely to be requested while examining a cyclone damage claim?
(a) Coroner‟s report (b) Report from Fire Brigade
(c) Police report (d) Report from Meteorological Department

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?
(a) Contribution (b) Discharge
(c) Subrogation (d) Indemnity

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?
(a) Insurer‟s decision is final (b) Umpire
(c) Arbitrator (d) Court of Law
8. Intimation of loss is to be made:
(a) at the exact time of the loss (b) after 15 days
(c) as soon as reasonably possible (d) any time after the loss

9. Investigation of loss is done by:

(a) unlicensed surveyor (b) licensed and qualified surveyor
(c) insured‟s representative (d) any person with a degree in engineering

10. For personal accident claims, report of________ is necessary.

(a) Surveyor (b) Doctor
(c) Police (d) Coroner
11. Independent surveyors are required for claims equal to or above_______ as per the Insurance Act.
(a) Rs. 40,000 (b) Rs. 15,000
(c) Rs. 20,000 (d) Rs. 25,000

12. Claims assessed outside the country in case of travel insurance polices are assessed by:
(a) Indian surveyors (b) Local surveyors in the country of loss
(c) Insurer‟s own employees (d) Claims settling agents named in the policy

13. In case of a fire claim, a report from the fire brigade:

(a) is not required (b) is optional for the insured

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(c) is necessary (d) is part of the police report

14. What is TAT?

(a) Time and Turn (b) Till a Time
(c) Time and Tide (d) Turnaround Time

15. On payment of loss, salvage belongs to:

(a) Surveyors (b) Insured
(c) Insurer (d) Local authorities

16. Arbitration is a claim settlement process done ______________.

(a) in the court of law (b) by a group of surveyors
(c) by arbitrator(s) chosen by the parties involved (d) arbitrarily by the insurance company‟s employees

17. Insurers under right of subrogation are allowed to recover the loss paid from:
(a) Shipping companies only
(b) Railways and road carriers only
(c) Airlines and Port Trusts only
(d) Shipping companies and railway and road carriers and airlines and port trusts
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Chapter 11 Customer Service

1. What is meant by customer lifetime value?

(a) Sum of costs incurred while servicing the customer over his lifetime
(b) Rank given to customer based on business generated
(c) Sum of economic benefits that can be achieved by building a long term relationship with the
customer
(d) Maximum insurance that can be attributed to the customer

2. Identify the scenario where a debate on the need for insurance is not required.
(a) Property insurance (b) Business liability insurance
(c) Motor insurance for third party liability (d) Fire insurance

3. As per the Consumer Protection Act, 1986, who cannot be classified as a consumer?
(a) Hires goods / services for personal use
(b) A person who buys goods for resale purpose
(c) Buys goods and services for a consideration and uses them
(d) Uses the services of another for a consideration

4. What does not go on to make a healthy relationship?

(a) Attraction (b) Trust
(c) Communication (d) Scepticism

5. Which among the following is not an element of active listening?

(a) Paying good attention (b) Being extremely judgemental
(c) Empathetic listening d) Responding appropriately

6. Which among the following is not a characteristic of ethical behaviour?

(a) Making adequate disclosures to enable the clients to make an informed decision
(b) Maintaining confidentiality of client‟s business and personal information
(c) Placing self-interest ahead of client’s interests
(d) Placing client‟s interest ahead of self interest

7. _____________ is not a tangible good.

(a) House (b) Insurance
(c) Mobile Phone (d) A pair of jeans

8. _______________ is not an indicator of service quality.

(a) Cleverness (b) Reliability

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(c) Empathy (d) Responsiveness

9. In India _______________ insurance is mandatory.

(a) Motor third party liability (b) Fire insurance for houses
(c) Travel insurance for domestic travel (d) Personal accident

10. One of the methods of reducing insurance cost of an insured is __________

(a) Reinsurance (b) Deductible
(c) Co-insurance (d) Rebate

11. A customer having complaint regarding his insurance policy can approach IRDA through
(a) IGMS (b) District Consumer Forum
(c) Ombudsman (d) IGMS or District Consumer Forum or Ombudsman

12. Consumer Protection Act deals with:

(a) Complaint against insurance companies
(b) Complaint against shopkeepers
(c) Complaint against brand
(d) Complaint against insurance companies, brand and shopkeepers

13. ___________ has jurisdiction to entertain matters where value of goods or services and the compensation claim is
up to 20 lakhs
(a) High Court (b) District Forum
(c) State Commission (d) National Commission

14. In customer relationship the first impression is created:

(a) By being confident (b) By being on time
(c) By showing interest (d) By being on time, showing interest and being confident

15. Select the correct statement:

(a) Ethical behaviour is impossible while selling insurance
(b) Ethical behaviour is not necessary for insurance agents
(c) Ethical behaviour helps in developing trust between the agent and the insurer
(d) Ethical behaviour is expected from the top management only

16. Active Listening involves:

(a) Paying attention to the speaker
(b) Giving an occasional nod and smile
(c) Providing feedback
(d) Paying attention to the speaker, giving an occasional nod and smile and providing feedback
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Chapter 12 Insurance Career Prospects

1. Which among the following are the two basic qualities that make a good sales person?
(a) Empathy and ego drive (b) Prejudice and loathing
(c) Pride and honesty (d) Scepticism and perseverance

2. Which among the following is the most likely to contain the IRDAi stipulated 50 hours training to help prospects
clear the IRDAI examination?
(a) Process training (b) Product training
(c) Pre-recruitment training (d) Sales training

3. ________ is a representative of the insurance company and is governed by the principal agent relationship.
(a) Insurance agent (b) Broker
(c) Banks (d) Underwriter

4. _________________ is collaboration between banks and insurers to distribute insurance products.

(a) Bancassurance (b) Agent

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(c) Broker (d) Insurance company

5. _____________ determines whether the proposal should be admitted, whether risk can be accepted.
(a) Agent (b) Insurer
(c) Underwriter (d) Insured

6. Broker represents:
(a) One insurance company (b) Multiple insurance companies
(c) Insurance Regulatory and Development Authority (d) Customer

7. _________________ cannot become corporate agent.

(a) A co-operative society (b) An individual
(c) A bank (d) A broker

8. Insurance brokers are licensed by:

(a) Insurance Regulatory & Development Authority (b) Reserve Bank of India
(c) Security Exchange Board of India (d) Government of India

9. The following is not a benefit of insurance agency.

(a) No limit on income from commission (b) Fixed salary income
(c) Freedom to decide working hours (d) Social prestige

10. Following is required in insurance agency career for achieving success:

(a) Will to excel
(b) Empathy towards customer
(c) Truthfulness
(d) Will to excel, empathy towards customer and truthfulness

11. Following is not an insurance intermediary:

(a) Corporate agent (b) Share broker
(c) Insurance broker (d) Insurance agent

12. An agent can earn upto:

(a) 20,000 per month (b) Rs. 10,00,000 per month
(c) Rs.1 Crore per year (d) Unlimited amount based on her efforts

---------------------The End---------------------

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