2018

BALIC IC 38 Mock Test

MOCK TEST 3
AGENCY TRAINING
Test 3

Multiple Choice
Identify the choice that best completes the statement or answers the question.

1. What are the benefits of investing in insurance plans?

a. In Family Protection c. Retirement planning
b. Child education & marriage planning d. All of the above

ANSWER: D

2. Insurance is meant to?

a. Prevent specified events c. Compensate for losses from specified
events
b. Prevent damage to assets d. Rebuild the assets lost because of
from specified events specified events

ANSWER: C

3. Insurance is necessary because?

a. Assets depreciate over time and c. All of the above
through usage
b. Assets may be damaged by external d. None of the above
causes

ANSWER: B

4. Insurance works on the principle of?

a. Mutual help c. All of the above
b. Charity d. None of the above

ANSWER: A

5. Insurance works on the principle of?

a. Equal contributions c. Contributions dependent on
affordability
b. Proportional contributions d. None of the above

ANSWER: B

6. An insurer, as a trustee, has to ensure that?

a. The life fund is safe c. All of the above
b. The life fund earns the maximum d. None of the above
interest
 ANSWER: C

7. Life insurance is arranged because?

a. Someone may die c. All of the above
b. Someone may live d. None of the above

ANSWER: C

8. Transfer of Insurance from Insurance Companies is done in favour of?

a. Bancassurance c. Reinsurance
b. TPA d. Actuaries

ANSWER: C

9. Types of Insurance provided by Insurance market can be divided into?

a. Endowment and money back c. Government and Private insurance
insurance
b. Life and non-life insurance d. Health and saving insurance

ANSWER: B

10. Prabhu, a businessman has taken a term insurance for Rs. 30 lacs for 30 yrs. It is an
example for:
a. Risk retention c. Risk avoidance
b. Risk transfer d. Risk tolerance

ANSWER: B

11. Mr. X is illiterate and is buying an insurance policy. Mr. Y fill up the proposal form on
behalf of Mr. X and also endorses and signs an attestation in the proposal form. In
addition to all the documents, which other critical document should be taken?
a. Mr. X photograph c. Mr. X thumb impression
b. Mr. Y photograph d. Mr. Y thumb impression

ANSWER: C

12. If on maturity of an insurance policy only 25% of the amount is paid, what could be the
reason for this?
a. It is assigned c. It is paid up
b. It is a money back policy d. None of the above

ANSWER: C
13. A Client can reject a policy after how many days of receiving the same?
a. 30 c. 50
b. 15 d. 20

ANSWER: B

14. A & B in enters into a contract & B accepts the contract with a condition. Will this be
considered as a contract between A & B?
a. Contract is created only when the c. Both are correct
acceptance is unconditional.
b. Contract is created only when the d. Both are incorrect
acceptance is conditional.

ANSWER: A

15. Husband and wife are jointly taking an insurance policy and do not need a nominee.
What is the reason they do not need to mention a nominee under this insurance policy?
a. Whole life c. Joint Life Policy
b. Return of premium d. Endowment policy

ANSWER: C

16. In which kind of policy the insurable interest should exist only at the time of claim?
a. Motor insurance c. Liability insurance
b. Marine insurance d. Travel insurance

ANSWER: B

17. If a policy having two nominees what should be the minimum allocation?
a. Each nominee to get minimum 10% c. First nominee to get more than second
nominee
b. Each nominee to get minimum 25% d. No such condition

ANSWER: D

18. Two friends have taken same policy but their premiums are different why?
a. Age c. Sum Assured
b. Medical d. All the above

ANSWER: D

19. As per the norms of risk assessment by underwriting both the parents of a policy holder
died in their early 30s due to Heart disease, what is the risk assessed?
 a. Moral Hazard c. Occupational Hazard
b. Medical Hazard d. Physical Hazard

ANSWER: D

20. Mr. A wants insurance cover. But he is drinks alcohol frequently. What kind of hazard
you may categorize?
a. Physical hazard c. financial risk
b. Moral Hazard d. Pure risk

ANSWER: B

21. Income replacement methods equates human life value (HLV) to be?
a. Future value of present earning c. Present value of previous earning
b. Present value of future earning d. Future value of previous earning

ANSWER: A

22. In underwriting the economic value of the person is determined by?

a. Occupation of the person c. The income that he earns
b. Financial history of his family d. Human life value

ANSWER: D

23. What tax rate, if any, will be applicable to a life insurance policy holder for the maturity
proceeds of a Rs. 50,000 life insurance policy?
a. Nil c. 0.2
b. 0.1 d. 0.3

ANSWER: A

24. If 50000 is invested in Single Premium ULIP than what will be the minimum SA
applicable?
a. 50000 c. 62500
b. 75000 d. 100000

ANSWER: C

25. Term insurance if best suited for which of the following need?
a. home loan c. marriage of kids
b. education needs d. Retirement needs

ANSWER: A
26. Ram has invested Rs. 5000 in PPF and Rs. 1 lac in life insurance premium. In which
investment will he get maximum tax benefit?
a. Life insurance premium c. 50% on each
b. PPF d. 95% on life insurance and 5% on PPF

ANSWER: A

27. Mr. Sumesh takes a policy and pays premium of Rs. 20,000 with sum insured of Rs. 3
lac. What will be the tax implication on his maturity amount?
a. Fully taxable c. 0.2
b. 0.1 d. tax fully exempted

ANSWER: D

28. Kamal is willing to pay Rs. 60,000 p.a. for his ULIP policy. What should be the Sum
Assured in case he wants to avail the tax benefits?
a. 1 Lac c. 2 Lac
b. 3 Lac d. 1.5 Lac

ANSWER: B

29. What is the advantage of converting physical gold assets to gold ETFS Liquidity
a. Liquidity c. Purity
b. More gold in value d. More conversion value

ANSWER: A

30. A person takes a pension plan for 15 year term with Rs. 20,000 premium and Sum
Assured of Rs. 3 lac. What would be the tax implication on maturity value at the time of
maturity?
a. NIL c. 0.2
b. 0.1 d. 0.3

ANSWER: A

31. Critical illness rider was taken and the rider benefit has been claimed, the rider benefit
now gets?
a. Reduced the base SA c. continues as it is
b. terminated d. will discontinue for 1 months

ANSWER: B
32. Customer has opted for a 5 yrs. guaranteed annuity option. What will happen to annuity
if the customer survives for 5 years after the end of guarantee PD?
a. Paid up to 75yrs c. Till he die
b. Annuity will be continued for next 5 d. Not remembered
yrs.

ANSWER: B

33. Under a health insurance policy if a policy holder needs to claim his bonus, how can that
be done?
a. Cash encashment c. Increase in the cover level
b. Discount in the next premium d. Certain policy exclusion

ANSWER: B

34. Mr. Yash has taken an annuity on 25th August 2010. The benefit of the plan will start
from 25th August 2011. What type of annuity plan is this?
a. Guaranteed period annuity c. Deferred annuity
b. Life annuity d. Immediate annuity

ANSWER: D

35. Why do self-employed people need to buy medical insurance, as compared to persons
employed with a public sector company?
a. Public sector employees do not get c. Self-employed person fall sick quite
sick very often often
b. public sector employees enjoy d. Self-employed person give more
medical cover related to the Job priorities to health

ANSWER: B

36. Samir is married. His family has his partner and his dependent parents with no child.
What should be his priority?
a. Income protection c. Investment efficiency
b. Inheritance planning d. Long term saving

ANSWER: A

37. A couple has a 7 year old son. What solution would they be looking for?
a. Retirement c. Child education
b. Health care d. Life cover

ANSWER: C
38. In which of the recognised life stages an individual does not required any protection
cover?
a. Childhood c. Pre-retirement
b. Young married d. Retirement

ANSWER: A

39. Mr. Raj is married with 2 kids. Which plan can he take that can cover his whole family?
a. Health insurance c. Life insurance
b. Family floater d. Retirement

ANSWER: B

40. As an advisor why is it essential for you to carry out the financial planning exercise with
the prospective client?
a. Individuals understand their real c. Individual do not understand their real
needs and can prioritize' them needs and cannot prioritize them
b. Individuals have same financial d. Individual's real and perceived needs
needs at different stages of the life are same
cycle

ANSWER: C

41. Churning is bad because of what aspect?

a. Agents earn Lower Commission on c. Policyholders suffer due to surrender
churning charges and benefits
b. Policyholder gets more benefits d. Insurance companies get good
branding

ANSWER: C

42. If a person is missing then after how many years will he be considered as dead & Sum
Assured be paid to the nominee?
a. 5 c. 10
b. 7 d. 12

ANSWER: B

43. To whom is the prevention of money laundering Act 2002 (PMLA) applicable?
a. RBI/SEBI/IRDNFI c. All service providers
b. Corporate House d. All above

ANSWER: A
44. In a MWP policy the beneficiaries under the plan, other than wife, can be?
a. Ex wife c. Parents
b. Sibling d. Children

ANSWER: D

45. What is the limit of Ombudsman claim settlement?

a. Insurance contracts of value not c. Insurance contracts of value not
exceeding Rs. 20 lakhs exceeding Rs. 30 lakhs
b. Insurance contracts of value not d. Insurance contracts of value not
exceeding Rs. 25 lakhs exceeding Rs. 50 lakhs

ANSWER: A

46. If IRDA is unable to discharge its functions or duties, central govt.

a. Has power to supersede the IRDA by c. Has power to supersede the IRDA by
issuing notification issuing draft
b. Has power to supersede the IRDA by d. Can make changes in IRDA law
issuing a bill in parliament

ANSWER: A

47. According to Insurance Broker Association of India, what is the most appropriate
relationship between insurer and broker?
a. Insurance broker represents the client c. Insurer represent both client and
and insurer, remunerate the broker broker remuneration
b. The client represents broker and d. Broker only .service the client
insurer remunerate broker

ANSWER: A

48. The code of conduct has been prescribed in India by?

a. IRDA c. Insurance institute of India
b. insurance council d. Govt. of India

ANSWER: A

49. Rahul is a licensed insurance agent. As an agent he must carry out his role in accordance
with?
a. Insurance company code of conduct c. IRDA regulation code of conduct
b. IRDA Act code of conduct d. Insurance Act code of conduct

ANSWER: C
50. Shanker, an advisor, sold a term insurance and ULIP to Amar. Amar is unmarried with
no dependent. Shanker’s action would be:
a. Underselling of insurance policy c. Overselling of insurance policy
b. Churning d. Ethical practice

ANSWER: C