IC 26 - LIFE INSURANCE

FINANCE EXAM
 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

DEMO QUESTIONS

Question 1 In which money laundering stage does the following transactions take place ?
1. Several bank to bank transfers 2. Wire transfers between different accounts
in different names in different countries 3. Making deposits and withdrawals
of various amount of money in the accounts

1) Placement

2) Security

3) Integration

4) Layering

5) Small company transfer

Question 2 As per Insurance Act,1938 all insurance companies should conduct which of the following
audits? 1. Statutory Audit 2. Internal Audit 3. Concurrent Audit

1) Only 1 and 2

2) Only 1 and 3

3) Only 2 and 3

4) All 1, 2 and 3

5) Only 1

Correct Answer 1 Layering

Correct Answer 2 All 1, 2 and 3

 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

Question 3 Which life insurance policy pays when the insured dies and and also pays if the
insured survives ?

1) Endowment insurance plan

2) Money back policy.

3) Term insurance plan

4) Annuity.

5) Whole life insurance plan.

Question 4 Which is the first stage of money laundering process ?

1) Speculation

2) Conversion

3) Placement

4) Integration

5) Layering

Correct Answer 3 Endowment insurance plan

Correct Answer 4 Placement

Answer There are three main stages of money laundering - Placement, layering and
Explanation integration.
Placement - This is the movement of cash from its source.
 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

Question 5 In reference to a bank reconciliation statement, which of the following

statement(s) is / are CORRECT ? 1. Bank reconciliation statement is not a part
of double entry system 2. Bank reconciliation statement is sent by bank to
those customers who do not maintain a minimum balance 3. Bank
reconciliation statement is prepared by the bank and sent to its account holders

1) Only 1

2) Only 2

3) Only 3

4) Both 1 and 2

5) Both 1 and 3

Question 6 Which of these is/are Fund Management Expenses ? 1. Advertisement

expenses for ULIPs 2. Policy stamp expense on policy bond 3. Expenses
made for purchase and sale of securities

1) Only 1

2) Only 2

3) Only 3

4) Both 1 and 2

5) Both 2 and 3

Correct Answer 5 Only 1

Answer Bank reconciliation statement is not a part of the double entry system. It is
Explanation done to reconcile the debit / credit entries from the bank statement from
that of the books of accounts of the company i.e. difference between cash
book & passbook.

Correct Both 2 and 3

Answer 6
Policy stamp expense on policy bond & Expenses incurred at the time of management of
Answer investment of funds such as sale and purchase of securities can be termed as Fund Management
Explanation expense.
 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

Question 7 Where should an investor invest if he is looking to take moderate risk and get
moderate returns ?

1) In Bluechip Equity funds

2) In Debt Funds

3) In ELSS Funds

4) In Balanced Funds

5) In Money market funds

Question 8 Within how many days should the insurance companies report the suspicious
transactions to Financial Intelligence Unit ?

1) 2 days

2) 7 days

3) 15 days

4) 30 days

5) 45 days

Correct Answer 7 In Balanced Funds

Answer Balanced Funds invests both in Equity (for faster capital appreciation) and
Explanation Debt (for safety and regular returns). They are geared towards investors
who are looking for a mix of safety and modest capital appreciation.

Correct Answer 8 7 days

Answer Indian Government has set up a ‘Financial Intelligence Unit’ to track

Explanation possible money laundering attempt. Insurance companies should report the
suspicious transactions to Financial Intelligence Unit within 7 working days
of identification in the prescribed format.
 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

Question 9 Which risk is caused due to wide many factors with respect to securities like
recession, natural calamities, structural changes in the economy etc. ?

1) Default risk

2) Market risk

3) Liquidity risk

4) Capital risk

5) Concentration risk

Question 10 For a Whole Life Policy, which of these statements are INCORRECT ? 1. There is
no saving element 2. The maximum policy term is 10 years 3. Interest is also
payable on the premium

1) Only 2

2) Only 1

3) Both 1 and 2

4) Both 2 and 3

5) All 1, 2 and 3

Correct Answer 9 Market risk

Answer Explanation Market risk is the possibility of an investor experiencing losses due to
factors that affect the overall performance of the financial markets in
which he or she is involved. Market risk, also called "systematic risk,"
cannot be eliminated through diversification, though it can be hedged
against.

Sources of market risk include recessions, political turmoil, changes in

interest rates, natural disasters and terrorist attacks

Correct Answer 10 All 1, 2 and 3

Answer Explanation All of the above statements are incorrect about the whole life policies.
There is no interest payment, the policy term is till the age of 80 or for
35 annual premium payment and there is a saving element.
 IC 26- LIFE INSURANCE FINANCE
DEMO Q&As

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