Buy all IC27 HEALTH INSURANCE EXAM - 04

DETAILED RESULT

Q (1): With regards to Credit Risk, which of the below options is correct ?

1.Like in any other business with financial transactions, there is a risk of default by business associates
like reinsurers, providers and suppliers (Your answer is correct)

Explanation : Credit risk refers to default by business associates like providers, suppliers and reinsurers.
It is always present in any business with financial dealings.

2.Operational and other risks like risk of losing key human resources, risks of frauds, risk of not keeping
up with technology etc.

3.Although each risk by itself is not very large but there still exists the risk of concentration.

4.Credit risk mismatch reduces the insurers ability to get adequate cash to pay its liabilities at a short
term notice

5.Though the insurer may hold good quality assets, holding long term debt can lead to liquidity risk

Q (2): Which document helps a company to collect details like health status, income, premium etc?

1.SAP Report

2.Sales reports

3.Proposal form (Your answer is correct)

Explanation : Proposal form enables a company to collect details like health status, income, premium
payments details etc.

4.Medical reports

5.Financial documents

Q (3): Data is used by Governments for ______ .

1.analyzing claim settlements (Your answer is incorrect)

2.analyzing the overall performance of the sector

3.formulating social schemes (This is the correct answer)

Explanation : Various ministries of the Govt. have to use the data’s of health insurance in order to
formulate their own social schemes such as Rashtriya Swasthya Bima Yojana etc. which may require
detailed study of historical data related to disease burden, claims experience etc.

4.keeping track of market developements

5.benchmarking the performance of underwriting offices

Q (4): What is/are the reason/s for Health Insurance becoming the fastest growing segment ? 1. Due to
orders by the Government making it compulsary 2. More focus on marketing by the insurance
companies 3. Increase in awareness among the general public

1.Only statement 1 is correct

2.Only statement 2 is correct

3.Only statement 3 is correct

4.Only statements 1 and 2 are correct

5.Only statements 2 and 3 are correct (Your answer is correct)

Explanation : Health insurance is the fastest growing segment because of increasing awareness among
the people and improved focus on marketing by insurers.

Q (5): Seema was preparing for her medical entrance exams and was staying in a hostel in Kota.
Unfortunately she was not selected and tried to commit suicide. However she survived but got many
injuries and the treatment and hospitalization cost Rs 20000. She had a mediclaim of Rs 1 lac. How much
will the insurance company reimburse ?

1.Rs 1 lac (Your answer is incorrect)

2.Rs 20000

3.Rs 20000 + physiotherapy expenses

4.Rs 50000

5.NIL (This is the correct answer)

 Explanation : Seema would not get any reimbursement from the insurers as the expenses were in
respect of treatment injuries sustained while committing suicide. It amounts to self-injuries which
cannot be paid.

Q (6): Distribution of number of claims paid and the corresponding claim amount paid for different
ranges of sum insured' - can be seen from which type of analysis ?

1.Net Premium paid analysis

2.Claims analysis by sum insured (This is the correct answer)

Explanation : Claims analysis by sum insured analysis can show the distribution of number of claims
paid and the corresponding claim amount paid for different ranges of sum insured.

3.Claims probability distribution

4.Earned premium

5.Claims analysis by age bands (Your answer is incorrect)

Q (7): Fill in the blanks : Prescribing of the correct qualifications helps to ______ and other market
conduct issues.

1.ensure that insurers cannot arbitrarily decline renewals and cancel policies

2.prevent mis-selling (Your answer is correct)

Explanation : Prescribing the correct qualifications helps to prevent mis-selling and other market
conduct issues.

3.have a cap on waiting periods and cost sharing provisions

4.protect the access right to consumers

5.maintain standardization of definitions / terms

Q (8): Mr. Suraj had insured him self against accident by taking two BENEFIT POLICIES. He took one from
Company X for Rs 25000 and one from Company Y for Rs 40000. Later he met with an accident and was
hospitalized. The hospitalization expenses were Rs 40000. What amount will be paid by both the
companies ?

1.Company X - Rs 16000, Company Y - Rs. 24000

2.Rs 20,000 by each company

3.Company X - Rs 25000, Company Y - Rs. 40000 (Your answer is correct)

Explanation : Since both the policies taken by Mr. Suraj are benefit policies, both will pay the cost of
treatment undertaken by the insured. Thus Co. X would pay Rs. 25000 & Co. Y would pay Rs. 40000.

4.Company X - NIL, Company Y - Rs. 40000

5.As mentioned in the insurance proposal

Q (9): Name the measure(s) under human interface / process improvisation for fraud prevention.

1.Comprehensive claims information

2.Audits

3.Control business when fraud is not manageable (This is the correct answer)

Explanation : Fraud in insurance can be curbed through various efforts combined together. Under
human interface / process, if all the processes or control measures fail to curb the fraud, then it is better
to stop doing business in that format.

4.Vigilance, Compliance checks (Your answer is incorrect)

5.Ability to detect fraud effectively

Q (10): Who listens to the appeals against the orders of any District Forum within the State ?

1.State Commission (This is the correct answer)

Explanation : Appeals against the orders of any District Forum within the State lies with Consumer
Dispute Redressal Commission known as State Commission.

2.District Forum (Your answer is incorrect)

3.Ombudsman

4.Nodal officer

5.National Commission
Q (11): Which of the following statements is/are TRUE with regards to 'health savings on investment
linked plans' ?

1.Although the risk premium is allocated to health insurance coverage, the investment amount is
diverted to the unit linked funds which shall pay for the future health costs (Your answer is incorrect)

2.These products can also offer other benefits like critical illness benefits, hospitalization allowances etc.

3.In such plans, the total premium is split up into risk premium and investment amount

4.These type of products discourage savings for expected high costs of medical care in the future

5.Statements 1, 2 and 3 all are correct, Statement 4 is Incorrect (This is the correct answer)

Q (12): Consider an example - A cedant has a 10-line surplus treaty which is subject to a maximum
cession of 1,000,000. What will be maximum gross capacity of the cedant for a single risk, if no other
reinsurance coverage is in force?

1.50000

2.1,10,00,000 (This is the correct answer)

Explanation : The cedant has cession of 1,00,000 which is known as line and business is placed or
accepted is one line or two line in this case the surplus treaty is 10 lines which comes to 1,00,00,000 +
one line 10,00,000 of insurer = 1,10,00,000

3.1,00,00,000 (Your answer is incorrect)

4.11,00,000

5.1,00,000

Q (13): Under Critical Illness benefit, _______ amount is given to the insured on the diagnosis of critical
illness like cancer, kidney failure or on undergoing of certain procedures.

1.Reasonable

2.Proportionate

3.Lump sum (Your answer is correct)

Explanation : Critical Illness benefit provides lump sum amount to the insured on the diagnosis of such
critical illness or on undergoing of certain procedures.

4.Fixed
5.Survival benefit

Q (14): To which country do the insurance schemes CSMBS, UCS SSS belong to ?

1.India

2.Bangladesh (Your answer is incorrect)

3.Thailand (This is the correct answer)

Explanation : There are three main insurance schemes which cover most of the residents of Thailand.
The schemes are; (The Civil Servant Medical Benefit Scheme’ (CSMBS) ‘Social Security Scheme’ (SSS), and
‘Universal Coverage Scheme’ (UCS).

4.Japan

5.USA

Q (15): Who runs/governs the Rashtriya Swasthya Bima Yojana (RSBY) ?

1.Commerce Ministry

2.Insurers

3.IRDA

4.The Stakeholders

5.Government (Your answer is correct)

Explanation : Rashtriya Swasthya Bima Yojana - "National Health Insurance Programme" is a

government-run health insurance programme for the Indian poor.The scheme aims to provide health
insurance coverage to the unrecognised sector workers belonging to the BPL category and their family
members shall be beneficiaries under this scheme.

Q (16): How is the health care services primarily funded in UK ?

1.Through commercial health insurance

2.Tax funded system (This is the correct answer)

Explanation : All residents of UK are enrolled under National Health Service (NHS) which is primarily
funded through the taxes paid by the residents to the Government (Tax funded system).
3.By out of pocket payments

4.Social health insurance (Your answer is incorrect)

5.Social welfare organization

Q (17): From the below options, which one is not a key tool for underwriting ?

1.Financial documents

2.Medical reports

3.Commission reports (Your answer is correct)

Explanation : A Commission report has nothing to do with underwriting. Rests are the key tools of
underwriting. A commission report is the financial arrangement of conducting the insurance business &
is between the insurer & the intermediary.

4.Sales reports

5.Proposal form

Q (18): Manusmrithi and Dharmasastra refer to ______ of the resources and ______ them during the
period of calamities.

1.collection , usage

2.stocking, distributing

3.pooling, distributing (Your answer is correct)

Explanation : Manusmrithi by Manu, Dharmasastra by Yagnavalya etc. refer to pooling of the resources
and distributing them during the period of calamities. This used to be the earliest mention of insurance
system in India. It is also mentioned in the Arthasastra by Kautilya.

4.usage, collecting

5.distribution , using

Q (19): What is the main disadvantage of this situation : Due to a soft market condition, a reinsurer
takes a decision to withdraw its participation on a treaty due to unsustainable premium rates.
1.When ever the market conditions becomes more favourable, it may prove difficult to participate on
the treaty in future.

2.As the reinsurer has withdrawn from a treaty, it will automatically lose other profitable business (Your
answer is correct)

Explanation : The main disadvantage is that it by withdrawing from a treaty, the reinsurer will
automatically lose other profitable business.

3.The reinsurers retrocession program will tend to become more expensive

4.When ever the market conditions becomes less favourable, it may prove difficult to participate on the
treaty in future

5.Any claim recoveries that are due to the reinsurer will no longer be payable

Q (20): Which department of insurance companies use data to benchmark the performance of
underwriting offices and staff members ?

1.Human Resources Department

2.Finance Department

3.Underwriters Department

4.Actuaries Department (Your answer is incorrect)

5.Marketing Department (This is the correct answer)

Explanation : Data are the tools of insurance. Under health insurance industry, data is used at various
sectors at various levels. Marketing and sales department use data to benchmark the performance of
underwriting offices and staff members.

Q (21): Which of the following statement is correct ?

1.The NRH (National rural health) mission is funded by the Centre and usually implemented through the
Central machinery

2.The NRH (National rural health) mission is funded by the state and usually implemented through the
central machinery

3.As per Indian constitution the areas of public health, hospitals etc. falls in the concurrent list

4.As per Indian constitution the areas of public health, hospitals etc. fall in the general list
5.The NRH (National rural health) mission is funded by the Centre and usually implemented through the
state machinery (Your answer is correct)

Explanation : As per constitution of India, National rural health mission is funded by the Centre and
usually implemented through the state machinery.

Q (22): The frauds which are perpetrated by medical service providers against an insurance company or
its policy holders are known as _______ .

1.Medical frauds

2.Internal fraud

3.External fraud (This is the correct answer)

4.Soft fraud

5.Hard fraud (Your answer is incorrect)

Q (23): Which could be a measure under 'technology and process interface' for fraud prevention?

1.Effective judicial action

2.RAG analysis (This is the correct answer)

Explanation : Fraud in insurance can be curbed through various efforts combined together. One of
them is through RAG (Red, Amber, and Green) through technology and process interface. All the
business providers are analysed periodically & the worst performers among hospitals, agents, diagnostic
centers etc. are rated RED, AMBER or GREEN respectively through analysis & segment classification.

3.Sound whistle blower policy

4.Creation of fraud database

5.Creation of consumer awareness (Your answer is incorrect)

Q (24): Mr. Satish bought a health insurance cover of Rs 50000 against critical illness hospitalization. He
contracted malaria and was hospitalized and the hospitalization charges came to Rs 20000. Considering
his policy was a benefit product which of the following statement holds true ?

1.Mr Satish was paid Rs. 20000 by the insurer

2.Mr Satish was paid Rs. 50000 by the insurer (Your answer is incorrect)
3.Mr Satish was paid Rs. 70000 by the insurer

4.Mr Satish was paid Rs. 10000 by the insurer

5.The insurer rejected Mr. Satish's claim (This is the correct answer)

Explanation : A dreaded disease like cancer, heart attack etc. is considered as critical illness which
involves very high cost of treatment. The critical illness policy would not cover malaria. Even if his policy
was a benefit product, the treatment for malaria is not a covered event/ illness & therefore his claim
would be rejected by the insurer.

Q (25): In which year were the IRDA Micro Insurance regulations framed ?

1.2000

2.2003

3.2004

4.2005 (Your answer is correct)

Explanation : Insurance Regulatory and Development Authority of India (IRDAI) has created a special
category of insurance policies called micro-insurance policies to promote insurance coverage among
economically vulnerable sections of society. The IRDA Micro-insurance Regulations, 2005 defines and
enables micro-insurance. A micro-insurance policy is: A general or life insurance policy with a sum
assured of Rs 50,000 or less.

5.2006