CHAPTER 1 INTRODUCTION TO INSURANCE

TEST QUESTIONS 1. Insurance is meant to Prevent specified events Prevent damage to assets from specified events Compensate for losses from specified events * Rebuild the assets lost because of specified events 2. Insurance compensates losses By replacing the original asset To the full extent of lost income, Only to the extent of insured amount * All the three ways 3. Insurance is necessary because Assets depreciate over time and through usage Assets may be damaged by external causes * Assets may break down and become unusable None of the above reasons 4. Insurance helps to Reduce the consequences of adverse situations * Guarantee that assets are always productive Ensure that assets never breakdown Do all of the above 5. Insurance benefits replace All physical losses, in full All physical losses, partly All monetary losses, in full The monetary losses, but only to some extent * 6. Which of the following possibilities are insurable? That one may not win the lottery jackpot That the marriage will work out successfully That the son will get admission in the prestigious college he has applied for That it will not rain on the day of the cricket match *

7. The amount of insurance depends on The peril The risk Neither the peril nor the risk Both the peril and the risk * 8. The amount payable under a life insurance policy depends on The income of the insured person at the time of the claim The income of the insured person when he took the insurance The amount of the sum assured * None of the above 9. State which of the following statements is correct Risk is uniform for all assets Life insurance improves standards of living Both the above statements are correct Both the above statements are wrong 10. An insured person can afford to Ignore safety precautions Be less serious on the packaging of goods Be lenient on controls in warehouses Do none of these three * 11. Insurance works on the principle of Sharing Probabilities Large numbers All of the above * 12. Insurance works on the principle of Trust Sharing Randomness All of the above * 13. Insurance works on the principle of Mutual help * Charity Both of the above Neither of the above 14. Insurance works on the principle of Equal contributions

Proportional contributions * Contributions dependent on affordability None of the above

15. Micro insurance can be transacted by Life insurers only Non-life insurers only Both life and non-life insurers * Only by specially created insurers 16. State which of the following statements is correct Risk, if certain, cannot be insured. Risk refers to the loss that happens Both the above statements are correct * Both the above statements are wrong 17. A human being Is an economic asset Is an income earning asset Is a perishable asset All the above * 18. A human beings value is measured by The income that he generates * The value of the goods that he produces His academic qualifications All of the above 19. The asset, which is a human being, perishes when He dies He becomes disabled to work He retires from work In all the above situations * 20. Which of the following events are insurable in a life insurance policy? The child to be a born is not a male child The child, when born, has physical deformities Neither of the above situations * Both the above situations 21. The insurer, being a trustee, has to ensure that The claim paid is genuine The premium charged is fair and reasonable A suspicious claim is not paid

All of the above

22. An insurer, as a trustee, has to ensure that The life fund is safe The life fund earns the maximum interest Both of the above * Neither of the above 23. An insurer, as a trustee, is responsible to the The policyholders * The IRDA The Government All the above 24. An insurer, as a trustee, has to give priority to Policyholders, as a class * An individual policyholders difficulties The claimants financial condition All of the above 25. The probability of 50% for an event happening means that the event Will happen regularly every alternate occasion Will happen 50% of the time over a very large number of trials Will never exceed 50%, however large be the attempts made Will become closer to 50% as the attempts increase * 26. The probability of an event is mentioned As a ratio As a percentage Neither as a percentage nor as a ratio Either as a percentage or as a ratio * 27. A probability of one in a hundred is valid When it happens once in a hundred trials Even when the event happens fifty times in a thousand trials When the event does not happen even once in a hundred trials In all the above situations * 28. Insurance is legitimate When an adverse happening is likely * When an adverse happening is unlikely When an adverse happening is certain In all the above three situations

29. Insurance covers situations When the consequences of the happening are beneficial When the consequences are harmful * When the consequences are immaterial When the consequences cannot be measured in money terms 30. Life insurance is arranged because Some one may die Some one may live Of both the above reasons * Of neither of the above reasons 31. In a life insurance contract, the beneficiary may be the The policyholder The life insured The dependents of the life insured All the three mentioned above * 32. Which one of these principles does not apply in the case of a life insurance contract? The principle of indemnity * The principle of good faith The principle of insurable interest The principle of large numbers 33. Insurance benefits Individuals The country The society All the three * 34. Insurance reduces the burden on The society Individual families Business houses All the three * 35. The business of insurance has Social implications Impact on economic development of the country Impact on the economic well being of families All the above implications * 36. The business of insurance affects Availability of capital for business *

The life span of individuals The safety of equipments in factories All these three

37. The competition for the business of life insurance is Non-life insurance Small savings House property None of these three * 38. The competition for the life insurance agent comes from those who canvass for Small savings Mutual funds House property All the three above * 39. Life insurance is better than other avenues of savings in respect of Marketability Liquidity Transferability All the three above * 40. Life insurance is better than other avenues of savings in respect of Appreciation Tax benefits Usefulness in emergency * All of the above 41. State which of the following statements is correct Insurance is related to probable loss. * Perils are avoidable Both the above statements are correct Both the above statements are wrong 42. State which of the following statements is correct Premium is based on expectation of losses Living too long is a risk Both the above statements are correct * Both the above statements are wrong 43. State which of the following statements is correct The strength of a wrestler can be insured The losses are shared equally by all the policyholders Both the above statements are correct

Both the above statements are wrong

44. State which of the following statements is correct Insurance prevents the risk Insures compensates losses in full Both the above statements are correct Both the above statements are wrong * 45. Reinsurance is the name given to An individual taking insurance for the second time An insurer placing insurance with another insurer Both the above situations Neither of the above situations 46 State which of the following statements is correct Living too long is a blessing, not a risk Living too long is a risk * Both the above statements are correct Both the above statements are wrong 47 State which of the following statements is correct Perils are avoidable Perils are not avoidable * Both the above statements are correct Both the above statements are wrong 48. State which of the following statements is correct Probabilities of death and of survival are mutually exclusive There are no substitutes for life insurance Both the above statements are correct * Both the above statements are wrong

CHAPTER 2 PRINCIPLES OF LIFE ASSURANCE

TEST QUESTIONS 1. Which one of the following statements is correct?

A life insurance policy is a contract, enforceable in a court of law * A life insurance policy is not required to be stamped Both the statements are correct Both the statements are wrong

2. Which one of the following statements is correct? The principle of utmost good faith applies only to life insurance The principle of utmost good faith applies only to non-medical cases The principle of utmost good faith is operative only for two years All the above statements are incorrect * 3. The principle of utmost good faith is meant to protect the interests of The insurer The community of policyholders * The shareholders None of the above 4. The principle of utmost good faith is important to ensure That the premium charged is correct That no one gets an undue advantage That there is no adverse selection All the three factors mentioned above * 5. The responsibility to comply with the principle of utmost good faith rests with The agent The proposer * The life to be insured All the three 6. The principle of utmost good faith does not apply to Facts of common knowledge Facts of law Facts which are not material for underwriting All the three kinds of facts mentioned above * 7. Which one of the following statements is correct? Capacity to contract applies to both parties. Consent to the contract can b e implicit Both the statements are correct * Both the statements are wrong 8. Which one of the following statements is correct in life insurance? The principle of good faith continues to operate till the policy becomes a claim

Facts which happen after the policy has commenced, need not be reported * Illnesses after the policy has commenced must be informed to the insurer All the above three statements are correct.

9. A life insurance policy becomes invalid if There is a change in occupation after the policy has commenced If the policyholder changes his residence to another country The statements in the proposal are found to be substantially wrong The insured person becomes sick after issue of policy. 10. The principle of utmost good faith will operate in an existing policy Every time the premium is paid If the policy has lapsed and it has to be revived * If the insured person falls sick and is admitted to hospital If the insured person changes his job

11. If the life to be insured falls sick, that fact has to be informed to the insurer If it happens within two years of commencement of risk If it happens before the first premium receipt is issued * If it happens before the policy document is issued Only if there is a specific query from the insurer 12 Which one of the following statements is correct? Duty to disclose applies till the claim arises in life insurance Insurers are responsible for adverse selection Both the statements are correct Both the statements are wrong * 13. The existence of insurable interest is decided by The interest which the proposer has in the asset being insured The relationship between the proposer and the object of insurance The legal decisions on these matters All of the above * 14. Which of the following risks are insurable? Speculative Economic * Sure to happen All of the above 15. Insurable interest is Defined in the Insurance Act Defined in the Contracts Act Defined by the IRDA

Not defined in any written law *

16. In the case of life insurance, insurable interest should exist At the inception of the policy * At the time of a claim At the time of every renewal premium payment All the above occasions 17. In the case of life insurance, the principle of insurable interest operates In the same way as in marine insurance In the same way as in fire insurance In the same way as in motor insurance Differently than in other forms of insurances * 18. Which of the following statements is correct? The principle of indemnity does not apply to life insurance policies * The principle of indemnity does not apply to insurance on human beings The principle of indemnity does not apply to third party motor insurances All the above statements are wrong 19 Which one of the following statements is correct? Declaration at the end of the proposal form has no legal sanctity Declaration at the end of the proposal is a warranty * Both the statements are correct Both the statements are wrong 20. Because of the principle of indemnity, There would be difficulties in settling claims in general insurance There are frequent disputes at the time of settling claims There may be attempts to exaggerate the claims All the above three may happen * 21. Which one of the following statements is correct, with reference to life insurance? The claim payable is subject to the principle of indemnity The claim payable will depend on the Sum Assured * The claim payable will depend on the income of the deceased person The claim payable will depend on the size of the family left behind 22. Which one of the following statements is correct, with reference to life insurance? The claim can be paid only after verification of the income of the deceased person The claim amount should not exceed the loss of income to the family The claim amount payable should be determined by a surveyor. None of the above statements is true *

23. An insurance contract is valid because It is not a wagering contract * It promotes socially desirable causes It takes care of the destitute It provides Government with large funds 24. Retention of risk may be done conveniently by Large corporations * Small companies Single individuals None of the three 25. In the case of life insurance, the risks Can be avoided Cannot be avoided * Are avoidable through medical science Are avoidable through proper food habits 26. Which one of the following statements is correct? It is difficult to accurately value a human life. It is possible to reasonably estimate the value of a human life. Both the statements are correct * Both the statements are wrong 27. Which one of the following statements is correct? The needs of people are different The needs of people vary according to life styles The needs of people depend on their upbringing All the three statements are correct * 28. Which one of the following statements is correct? A person who has just retired from a lucrative job may not need life insurance A person who has spent twenty years in Dubai may not need life insurance A person who has just taken up his first job needs life insurance * All the above statements are wrong 29. Which is the right time for taking life insurance? When you are about to get married Soon after you have got married Just when you are joined a new job All the three times are right * 30. Which one of the following statements is correct? A person whose children are well settled does not need life insurance

A person who has no family does not need life insurance Both these statements are correct Both these statements are wrong *

31. Which one of the following statements is correct? Life insurance helps when one wants to take a loan for a house Life insurance helps one to retire a comfortable retired life Both these statements are correct * Both these statements are wrong 32. In which of the following situations will a life insurance policy come in handy? When you want to set up an independent business When you want to buy a new house In neither of the above situations In both the above situations * 33. Which one of the following statements is correct? People hesitate to buy life insurance because they are not aware of their needs People hesitate to buy life insurance because they prefer to enjoy the present Both the statements are correct * Both the statements are wrong 34. Which one of the following statements is correct? A person with an established business does not need life insurance Life insurance is necessary to save income tax Both the above statements are correct Both the above statements are wrong * 35. Which of the following needs can be met though life insurance? Providing for family in the event of sudden death To lead a comfortable life in ones old age Completing ones investment plans All the above * 36. Which one of the following statements is correct? Many people think that they do not need life insurance Many people think that there is no hurry to buy life insurance Both the above statements are correct * Both the above statements are wrong 37. Which one of the following statements is correct? Life insurance helps people to get loans for car or house Life insurance helps policyholders to save income tax Both the above statements are correct *

Both the above statements are wrong

38. Which one of the following statements is correct? People do not see the need for life insurance as top priority People are unwilling to set aside immediate pleasures to secure life insurance Both the above statements are correct * Both the above statements are wrong 39. Which one of the following statements is correct? Term insurance policies are suitable for elderly adults A nominee must have insurable interest in the life insured Both the statements are correct Both the statements are wrong * 40. Which one of the following statements is correct? Retention of risk is an alternative to insurance Insurable interest exists between partners Both the statements are correct * Both the statements are wrong Workbook 1. A town has 4000 houses. Experience of past ten years shows that over a period of one year, one in every thousand houses gets burnt by fire. If the expected loss is Rs.2,00,000 per house, what would be annual premium to cover each house ? a) Rs.200 * .2 b) Rs.300 c) Rs.400 d) none of these

10 persons are expected to die in a year out of a group of 10,000 persons aged 50, who are normal healthy lives. If each persons family is to be given a sum of Rs.1,00,000 as death claim amount, what would be the share of each person towards this loss. a) 100 * b) 150 c) 250 d) 200

.3

There are ten thousand employees aged 50 and have similar prospects of longevity. Experience shows that over a period of one year, ten persons out of thousand persons die. If the economic value of a deceased person is assumed to be Rs.50,000/-, what would be the share of loss of each person. a) 500 * b) 1000 c) 750 d) 1500

CHAPTER 3

PREMIUMS AND BONUSES

PREMIUM CALCULATION 20 The following illustrations are based on certain assumptions with regard to practices of insurers. These assumptions are specified at the appropriate places. While making calculations for any policy, the practices of that insurer must be conformed to. Step 1: Find out tabular premium i.e. premium quoted in published premium rates, for given age (nearer, next or last birthday as the case may be) for the relevant plan and term. This premium is usually stated as Rs. per thousand SA. Assume that the figure is Rs. 45.60 Step 2 : Deduct adjustment for large sum assured, if applicable. Assuming that the insurer allows rebates as follows Sum Assured Rs.25,000 Rs.49,999 Rs.50,000 Rs.99,999 Rs.1,00,000 and over Rebate per thousand S.A Re.1/Re.1.50/Rs. 2/-

and that this is a policy for Rs.75000 SA, the premium would be Rs. 44.10 (45.60 less 1.50) Step 3 : Make adjustment for mode of payment of premium. Assuming that the insurer provides rebates of 1% for yearly mode and that the mode proposed in this case is yearly, the premium would decrease by 1% of 44.10 or Rs.0.44, making the premium Rs. 43.66 Step 4 : Add Extras. Assuming that the Extras in this case are Rs.1.50 per thousand for occupational hazard and Rs.2 per thousand for supplementary benefits, the total addition is Rs. 3.50 making the total premium Rs. 47.16 Step 5 : Multiply by SA (Rs.47.16 X 75) equals Rs. 3537.00 NOTE: If the adjustment of 1% for mode is made before the adjustment for SA, the deduction would have been 0.46, instead of 0.44. The difference can be significant, if the insurance is for a large SA. Insurers would clarify how they want it to be done 21 The above calculation was made for yearly mode of premium. Therefore, the figure of 3537 is the premium to be charged. If however, the mode was quarterly, then the annual premium worked out by the above method, without the rebate of 1% for yearly mode, will have to be divided by 4 to determine the quarterly instalment premium.

22 In the calculation shown in the earlier paragraph, the final figure arrived at has no paise. If there are paise in the final figure, they may be (i) ignored or (ii) rounded off to the next higher integer, or (iii) rounded off to the nearest integer or (iv) rounded off to the nearest 50 paise or any other adjustment, as the insurer may practice.

23 A few examples are given below Plan term 1. 2. 3. 14-30 5-35 75-20 S.A. Rs.25,000/Rs.50,000/Rs.30,000/Age 35 30 30 Mode Hly Yly Mly (SSS) Other riders DAB + EPDB Health extra Rs.3% DAB + EPDB

NOTE : DAB stands for Double Accident Benefit and EPDB stands for Extended Permanent Disability Benefit. Most insurers combine these two benefits together 1. Tabular premium is Rs.36.55 Less adjustment (a) for * SA 1.00 (b) for Hly mode 1.5% 0.55 Balance Rs.35.00 ======= Balance x SA = 35 x 25 = Add DAB + EPDB Half yearly premium 2. Tabular premium Rebate for large SA Adjustment for Qtly. Mode nil Balance Balance x SA. In thousands i.e.26.90 x 50 = Add : health extra Rs.3 x 50 (1) (3) (2) (per thousand SA.) (4) (5) (6) (7)

Rs.875.00 + 25.00 Rs.900.00 Rs.450.00 Rs.28.40 Rs. 1.50 Rs.26.90 1345.00 150.00 ---------1495.00 Rs.373.75 Rs. 66.80 1.00 -----------Rs. 65.80 ======= Rs.1974 + 60 ---------Rs.2034

Quarterly instalment premium 3. Tabular premium Less adjustment for SA Adjustment for mode nil Annual premium 65.80 x 30 = Add for DAB + EPDB Monthly instalment premium

(SSS) (divide by 12)

Rs. 169.05 i.e. Rs.169.00 TEST QUESTIONS

1. Which one of the following statements is correct? The premium is the price paid by the policyholder to secure insurance The amount of premium varies according to the insurance plan Both the above statements are correct * Both the above statements are wrong 2. Which one of the following statements is correct? The premium under a life insurance policy may be paid monthly The premium under a life insurance policy may be paid annually Both the above statements are correct * Both the above statements are wrong 3. Which one of the following statements is correct? The sum of all the premiums paid will be equal to the Sum Assured The sum of all the premiums paid will be more than the Sum Assured Both the above statements are correct Both the above statements are wrong * 4. Which one of the following statements is correct? The sum of all the premiums paid will be more than the Sum Assured The sum of all the premiums paid will be less than the Sum Assured Both the above statements are wrong * Both the above statements are correct 5. Which one of the following statements is correct? The annual premium must be twelve times the monthly premium The annual premium may be less than twelve times the monthly premium * Both the above statements are wrong Both the above statements are correct 6. Which of the following statements is correct? The annual premium is equal to the SA divided by the term of the policy The annual premium increases as the term of the policy increases Both the above statements are correct Both the above statements are wrong * 7. Which one of the following statements is correct? The annual premium for a long term policy is more than for a short term policy

The annual premium for a long term policy is less than for a short term policy * Both the above statements are wrong Both the above statements are correct

8. Which one of the following statements is correct? The premium increases as age of the insured person increases * The premium decreases as the age of the insured person increases The premium is the same whatever be the age of the person The premium is the same for a person aged 30 for all plans of insurance 9. Which one of the following statements is incorrect? The premium depends on the age of the policyholder * The premium depends on the age of the insured person The premium depends on the health of the insured person The premium depends on the occupation of the insured person 10. What does a premium depend upon? Age of the person to be insured Family history of the person to be insured Medical history of the person to be insured All of the above * 11. What does a premium depend upon? Religion of the person to be insured Income of the person to be insured Both the religion and the income of the person to be insured Neither the religion nor the income of the person to be insured * 12. The premium actually paid by the policyholder depends upon The wealth of the person to be insured The level of risk as assessed by the insurer * The tables of rates printed by the insurer None of the above 13. What does a premium depend upon? The place of worship visited by the person to be insured The state of health of the policyholder The decision of the underwriter * The report of the agent 14. Which one of the following statements is correct? The rate of premium charged can be less than the tabular rates

The rate of premium can be more than the tabular rates * Both the above statements are correct Both the above statements are wrong

15. Which one of the following statements is correct? The premium collected in the early years is less than what is required The premium collected in the early years is more than what is required * The premium collected in any year is exactly what is required All the above statements are correct 16. The pure premium will be Less than the office premium * More than the office premium Either more or less than the office premium Neither more nor less than the office premium 17. The net premium will be Less than the risk premium * More than the risk premium Calculated by adding expenses to the risk premium More than the pure premium 18. When interest rates fall, the premium charged by an insurer are likely to Increase * Decrease Remain the same Neither increase or decrease 19. The premium is loaded because of Interest likely to be earned Likely expenses * Likely claims Age of the insured person 20. The policyholder is concerned with the Office premium * Pure premium Net premium Risk premium 21. The premium rates printed in the promotional literature are Risk premiums

Net premiums Office premiums None of the above

22. The premium printed on the schedule of the policy is worked out from Net premiums Risk premiums Office premiums * None of the above 23. The reason for charging level premiums is Risk increases as age increases It is convenient to the policyholder It is convenient to the insurer All the above reasons * 24. The practice of charging level premiums Makes it convenient to the policyholder Reduces the likelihood of lapses Adds to the reserves of the insurer Has all the above benefits * 25. The practice of charging level premiums has the benefit of Making it easy for the policyholder to maintain the insurance cover Increasing the returns to the policyholder Helping the agent in his sales effort All the above 26. Adjustments are made to the tabular premiums because of The health of the person insured The frequency of premium payment The occupation of the person insured All of the above * 27. Which one of the following statements is correct? All insurers charge same premium rates. Premium rates are determined by the IRDA Premium rates are determined by the actuaries of insurers * All of the above statements are correct 28. Which one of the following statements is correct? The age next birthday is always higher than the age nearest birthday *

The age next birthday may be sometimes less than the age nearest birthday Both the above statements are correct Both the above statements are wrong *

29. Which one of the following statements is correct? The premium calculated on mortality alone is called risk premium Insurers collect premium in advance Both the statements are correct * Both the statements are wrong 30. Which one of the following statements is correct? The age last birthday can never be the same as the age nearest birthday The age last birthday is always less than the age next birthday * Both the above statements are correct Both the above statements are wrong 31. Which one of the following statements is correct? The age nearest birthday is always less than the age next birthday The age nearest birthday is always more than the age last birthday Both the above statements are correct Both the above statements are wrong. * 32. In life insurance, profit is determined by The accountant who prepares the balance sheet The actuary who makes a valuation * The auditor who certifies the annual accounts None of the above three persons 33. In the business of life insurance, valuation means An actuarial exercise to determine adequacy of funds * An attempt to determine the correctness of the values of assets Estimating the values of immovable property All of the above 34. The addition to the life fund in a year represents The profits made by the insurer in that year The moneys set aside by the insurer for the policyholders * The extra premium charged by the insurer to its policyholders All of the above 35. The addition to the life fund arises because of the Loading in the premium for bonus The practice of charging level premiums * Not having paid the claims on time

All the above reasons

36. A valuation is done by a life insurer because It is a statutory requirement It is necessary to be able to declare dividends to shareholders It tells the insurer how well it is managing the business All of the above * 37. The surplus in the life fund represents The profits of the business The excess premium collected by the insurer The dues to the shareholders None of the above * 38. The surplus disclosed in a valuation means That the interests of the policyholders are safe That the funds of the insurer are adequate to meet its liabilities That the business is being managed well All of the above * 39. Which one of the following statements is correct? The life fund belongs to the policyholders * The life fund belongs to the shareholders Both the statements above are correct Both the statements above are wrong 40. Which one of the following statements is correct? In a valuation, the actuary calculates the fund that the insurer must have In a valuation, the actuary calculates what the liability of the insurer is Both the statements above are correct * Both the statements above are wrong. 41. Which one of the following statements is correct? Bonus is declared out of the surplus declared by the actuary * The S.A is automatically increased when a bonus is declared All bonuses are reversionary bonuses All the statements above are correct 42. Which one of the following statements is correct? The bonus declared is uniformly applicable to all plans of insurance Bonus may vary between plans * Both the statements above are correct Both the statements above are wrong

43. The minimum percentage of the surplus to be set aside for policyholders is Ninety five Ninety * Eightyfive Nil (there is no minimum) 44. For what period is an interim bonus valid? For as long as the policy is in force Till the next declaration of bonus * Till the next valuation date As long as the management wants it to be 45. Which one of the following statements is correct? Bonus is paid along with the survival benefit in a money back policy Bonus is paid when the money back policy matures * Both the statements above are wrong Both the statements above are correct. 46. A bonus becomes possible because Actual experience is better than expectations The assumptions made in constructing the premium were conservative There is a loading for bonus in the premium Of all the above reasons * 47. What does a surplus in the life fund signify? That the premium rates must be revised downwards That the premium rates are appropriate That the company is too miserly in expenditure None of the above three * 48. When a certain level of bonus is declared, what does it mean? That this level will be maintained in future years That it is the return on ones investment, viz., premium Both the above meanings can be made Both the above meanings will be wrong * WORK BOOK

1.

Given the following data. Tabular premium Rs. 55 No rebate for mode. Rebate for SA above Rs. 50000 Rs. 2.00 per thousand. DAB @ Rs. 1.50 per thousand. DAB granted upto Rs.

8,00,000 only. Occupation extra Rs. 2.50 per thousand, what would be the half yearly premium for SA Rs. 1,50,000. (a) 4025 * 2. (b) 4175 (c) 4250 (d) 4350

On the basis of the following data S.A. Rs. 1,00,000/- tabular premium.. Rs. 33.10 Rebate R. 2/- per thousand for yearly mode. Re 1/- for half yearly, none for quarterly. Rebate Rs. 3/- per thousand for Rs. 1,00,000 and above. DAB Re. 1/- per thousand Occupation extra Rs. 4/- per thousand. Calculate the yearly premium for Rs 1 lakh SA . (a) 2810 (b) 3110 (c) 3310 * (d) 3360 3. Calculate quarterly premium (rounded off to the next higher rupee) on the basis of the following data. S.A Rs. 50,000/- , Date of maturity Rs. 24.12.2036.- Term 30 years. Date of birth 28.06.1979., mode rebate yly Rs 1.50 per thousand, hly Rs. 1.00, quarterly, nil and monthly 5 % extra. SA. rebate Rs. 1.50 per thousand for Rs. 50,000/- and above. Tabular premium. For age nearer birthday 26 Rs. 26.46 27 Rs. 27.08 28 Rs. 28.15 (a) 312 (b) 320 * (c) 331 (d) 339 Calculate half yearly premium on the basis of the following data Date of birth 28.06.1978. Date of maturity 24.12.2041., SA Rs 1,00,000/- , term 35 years. Tabular premium for age next birthday- age 27 Rs. 27.46, for age 28, Rs. 27.83 and for age 29, Rs. 28.37. Rebate 5 % extra for monthly, less Rs. 1/- for hly Rs. 1.50 for yearly, SA Rs. 1.50 for SA Rs. 50000/- and above. (a) 1266.50 (b) 1267 (c) 1293.50 * (d) 1294 5. Calculate monthly premium (rounded off to next higher rupee) S.A Rs 60,000/-, endowment 39 years, date of maturity 28.09.2045, large sum assured rebate Rs. 1.50 for Rs. 50,000 and above. Dat ofbBirth 26.12.1976 Premium per thousand SA For age next birthday 29 Rs 27.46 30 Rs 28.83 31 Rs 29.37 (a) 139 (b) 140 * (c) 141 (d) 142 Calculate monthly premium (rounded off to next higher fifty paise)

4.

6.

S.A Rs. 30,000/- with DAB for Rs. 1/- per thousand and occupational extra of Rs. 1.75 per thousand. Date of Birth 21.10.1980 5% extra for monthly mode of payment. Tabular premium Rs. 32.81 (a) 93,00 (b) 93.50 * (c) 94.00 7. (d) 94.50

A proposal for SA of Rs. 10 lakhs with DAB for monthly mode under SSS. Proposer had a previous policy of Rs. 5 lakhs with DAB. Proposal was accepted with health extra of Rs. 2.75 per thousand SA premium for DAB Re 1 per thousand 5% extra for monthly mode large SA rebate of Rs. 2/- per thousand for 1 lakh and above . Tabular premium Rs. 48.20 maximum total SA. on which DAB is allowed is Rs. 10/- lakhs. Find monthly premium, rounded off to the next higher rupee (A) 4102 (B) 4121 * (C) 4183 (D) 4195

8.

A policy for Rs.12 lakhs taken on 14.7.2007 under endowment plan for 20 years with DAB. Date of Birth is 12.11.1980. Proposal is accepted with DAB@ Rs.1.50 per thousand (maximum Rs.10 lakhs) and occupational extra of Rs.2.75 per thousand. No rebates for high SA However for yearly mode a rebate of Rs. 2 is given. Calculate yearly premium Tabular premium for age nearer birthday, as follows : Age 25 Age 26 Age 27 Age 28 Rs.48.20 Rs.48.40 Rs 49.10 Rs.49.80

(a) 60480 (b) 60980 (c) 61080 * (d) 61380 9. Given the following information, indicate which of the four options given below would be the correct half-yearly premium for an endowment policy for rs. 1 lakh, on the life of a person born on 28.6.1974. Term 35 years Date of maturity 24.12.2037 Tabular premium for age nearest birthday 27 - Rs.27.46 per thousand Tabular premium for age nearest birthday 28 - Rs.27.83 per thousand Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode and Rs. 1.50 less for yearly mode S.A. rebate Rs. 1.50 less for Rs. 50000 and above Options 1266.50 *

1246.50 1293.50 None of the above

10. Given the following information, indicate which of the four options given below would be the correct premium to be deducted from the salary of a person born on 28.6.1974, who has taken an endowment policy on his life. Sum assured Rs. 40000 Term 35 years Date of maturity 24.12.2037 Tabular premium for age nearest birthday 27 - Rs.27.46 per thousand Tabular premium for age nearest birthday 28 - Rs.27.83 per thousand Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode and Rs. 1.50 less for yearly mode SA. Rebate Rs. 1.50 less for Rs. 50000 and above Options 87.77 * 89.57 97.41 None of the above

11. . Given the following information, indicate which of the four options given below would be the correct annual premium (rounded off to the nearest rupee) for an endowment policy on the life of a person born on 28.6.1974. Sum assured Rs. 50000 Policy taken on 3rd March 2003, to be back dated by three months Tabular premium for age nearest birthday 27 - Rs.27.46 per thousand Tabular premium for age nearest birthday 28 - Rs.27.83 per thousand Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode and Rs. 1.50 less for yearly mode SA. Rebate Rs. 1.50 less for Rs. 50000 and above Options 1241.00 1241.50 1242.00 * None of the above

12. . Given the following information, indicate which of the four options given below shows the monthly premium (rounded off to the nearest rupee) to be paid by a person born on 28.6.1974, who has taken an endowment policy on his life. Sum Assured Rs. 40000 Term 35 years Date of maturity 24.12.2037 Tabular premium for age nearest birthday 27 - Rs.27.46 per thousand Tabular premium for age nearest birthday 28 - Rs.27.83 per thousand Tabular premium for age nearest birthday 29 - Rs.28.37 per thousand Premium adjustment 5% extra for monthly mode, Rs. 1 less for half yearly mode and Rs. 1.50 less for yearly mode SA. Rebate Rs. 1.50 less for Rs. 50000 and above Options 97.00 * 97.40 97.50 None of the above

CHAPTER 4 LIFE INSURANCE PRODUCTS

TEST QUESTIONS 1. A plan of insurance is said to be different from another if The sum assured is different The age of the life to be insured is different The date of commencement of policy is different The conditions when the sum assured becomes payable are different 2. A plan of insurance is said to be different from another if The mode of payment of premium is different The amount of premium is different The conditions for payment of sum assured are different * The date of maturity is different 3. A plan of insurance is said to be different from another if The date of maturity is different

The date of commencement of risk is different The underwriter decides to charge extra premium in one case The conditions when the sum assured becomes payable are different *

4. Which one of the following statements is correct? Every plan of insurance is a combination of two basic plans * The name given to a plan indicates the benefits available under the plan Both the statements above are correct Both the statement s above are wrong 5. Which one of the following statements is correct? Plans of insurance can be compared by reading the names given to the plans Plans of insurance can be compared by comparing the premium rates Both the statements above are correct Both the statements above are wrong * 6. Which one of the following statements is correct? A whole life plan is basically a term insurance plan * A money back plan is basically a pure endowment plan Both the statements above are correct Both the statements above are wrong 7. Which one of the following statements is correct? A marriage endowment policy is taken on the life of ones daughter A childrens deferred insurance policy is taken on the life of ones child * Both the statements above are correct Both the statements above are wrong 8. Which one of the following statements is correct? A marriage endowment policy insures the father and daughter together A term insurance plan can be for a long period * Both the statements above are correct Both the statements above are wrong 9. Which one of the following statements is correct? The sum assured under some policies increase every year The sum assured under some policies reduce every year Both the statements above are correct * Both the statements above are wrong 10. Which one of the following statements is incorrect? The SA payable on death can be more than the SA payable on maturity The SA payable on maturity can be more than the SA payable on death

Both the statements above are correct * Both the statement above are wrong

11. Which one of the following statements is correct? The SA is always payable immediately on death or survival The SA payable on death may be paid long after the death of the insured * Both the statements above are correct Both the statements above are wrong 12. Which one of the following statements is correct? The SA is always payable in a lump sum The SA is always payable in instalments The SA is always payable in a lump sum unless asked for otherwise All the statements above are wrong * 13. Which one of the following statements is correct? There is no difference between a term assurance plan and a Whole Life plan A Whole Life plan is a term assurance plan with an indefinite term * Both the statements above are wrong Both the statements above are correct 14. Which one of the following statements is correct? In a limited payment policy, there is a maximum limit to the SA In a limited payment policy, there is a maximum limit to the term Both the statements above are wrong * Both the statements above are correct

15. Which one of the following statements is correct? In a limited payment policy, the premium is paid as long as the policy is in force. In a limited payment policy, the premium stops before the end of the term * Both the statements above are correct Both the statements above are wrong 16. For the same age and SA, the premium under an ordinary Whole Life policy Will be more than in a limited payment Whole Life policy Will be less than in a limited payment Whole Life policy * Will be the same as in a limited payment Whole Life policy Can be more, less or the same as in a limited payment Whole Life policy 17. For the same age, SA and term, the premium under an Endowment policy Will be the same as in a limited payment Endowment policy

Will be more than in a limited payment Endowment policy Will be less than in a limited payment Endowment policy * Can be same, more or less than in a limited payment Endowment policy

18. For the same age and benefits, the premium under a limited payment policy Will be more than in a non-limited plan * Will be less than in non-limited plan Will be the same as in a non-limited plan May be more, less or same as in a non-limited plan 19. Limited payment plan policies may be preferred by persons Whose careers are likely to be short * Who are young and have just started their careers Who have large families Who are very wealthy 20. Limited payment plan policies may be preferred by persons Who are not first class lives Who are in their best of health Who careers have just begun Who do not expect to be in active employment for long * 21. Which one of the following statements is correct? The educational annuity policy is an annuity policy The educational annuity policy is meant for persons having young children Both the statements above are wrong * Both the statements above are correct

22. Which one of the following statements is correct? Any policy which promises a payment on a fixed date is an Endowment policy If the SA increases every year, it is a participating policy Both the statements above are correct Both the statements above are wrong * 23. Which one of the following statements is correct? Only participating policies are entitled to the benefit of bonus * A bonus is the return of additional premium paid by a participating policy Both the statements above are correct Both the statements above are wrong 24. Which one of the following statements is correct?

In a convertible plan, the insurer can refuse the conversion on medical grounds In a convertible plan, the conversion is done on the request of the policyholder * Both the statements above are correct Both the statements above are wrong

25. Which one of the following statements is correct? Convertible plans allow whole life plans to be altered to endowment plans * The option of conversion can be exercised whenever the policyholder chooses to Both the statements above are wrong Both the statements above are correct 26. Which one of the following statements is correct? If the option of conversion is not exercised, the policy will come to an end If the option of conversion is not exercised, the policy will continue as before * Both the statements above are wrong Both the statements above are correct 27. Which one of the following statements is correct? A conversion becomes effective when the policyholder exercises the option A conversion option is subject to the insured person being in good health Both the statements above are wrong Both the statements above are correct 28. Which one of the following statements is correct? Convertible plan policies do not participate in bonuses Money back policies are not convertible plan policies Both the statements above are correct Both the statements above are wrong *

29. Which one of the following statements is correct? A joint life policy may cover two brothers under one policy A joint life policy may cover a married couple under one policy Both the above statements are wrong Both the statements above are correct 30. Which one of the following statements is correct? A joint life policy may cover partners in business under one policy A joint life policy may cover a married couple under one policy Both the above statements are wrong Both the statements above are correct *

31. Which one of the following statements is correct? The premium of a joint life policy depends on the age of the older person

The bonus on a joint life policy is calculated on double the SA Both the statements above are wrong * Both the statements above are correct

32. Which one of the following statements is correct? Double endowment policy has no maturity benefit The bonus on a joint life policy is calculated on double the SA Both the statements above are correct Both the statements above are wrong * 33. Which one of the following statements is correct with regard to joint life policies? The premium is the total of the premiums for insuring the two persons separately The premium will be less than the cost for insuring the two persons separately * Both the above statements are wrong Both the above statements are correct 34. Which one of the following statements is true with regard to Childrens policies? They insure minor children * They insure only school going children Both the above statements are correct Both the above statements are wrong 35 Which one of the following statements is true with regard to Childrens policies? Risk cover begins on or after vesting date Risk cover begins immediately after the policy commences Both the statements above are wrong * Both the above statements are correct 36. Which one of the following statements is true with regard to Childrens policies? The insured child becomes the owner of the policy on vesting date * The insured child becomes the holder of the policy only when it is assigned Both the above statements are wrong Both the above statements are correct 37. Which one of the following statements is true with regard to Childrens policies? The deferred date is a policy anniversary The vesting date is a policy anniversary Both the above statements are correct * Both the above statements are wrong 38. Which one of the following statements is true with regard to Childrens policies? The policy vests at age 18 last birthday * The policy vests at age 18 next birthday

The policy vests at age 18 nearest birthday All the statements above are correct

39. Which one of the following statements is true with regard to Childrens policies? Risk will commence on deferred date automatically * Risk will commence on deferred date after satisfactory medical examination Risk will commence on deferred date with enhanced premium All the statements above are wrong 40. Which one of the following statements is true with regard to Childrens policies? On the deferred date, the insured child has to be at least 15 years old On the deferred date, the insured child need not be a major * On the deferred date, the policy must have been in force for at least ten years All the statements above are wrong 41. Which one of the following statements is true with regard to Childrens policies? An assignment has to be done on the deferred date An assignment has to be done on the vesting date Both the above statements are correct Both the above statements are wrong * 42. Which one of the following statements is true with regard to Childrens policies? The ownership of the policy changes on the deferred date The ownership of the policy changes on the vesting date * Both the above statements are wrong Both the above statements are correct.

43. Which one of the following statements is true with regard to Childrens policies? On vesting, the insured person has an option to change the term of the policy On vesting the insured person has an option to increase the SA Both the statements above are wrong * Both the statements above are correct 44. Which one of the following statements is correct? A money back type of policy is a variable insurance policy A convertible policy is a variable insurance policy Both the statements above are correct Both the statements above are wrong * 45. Which one of the following statements is correct? A variable insurance plan combines an insurance plan with an investment plan *

A variable insurance policy guarantees a return or yield Both the statements above are correct Both the statements above are wrong

46. Which one of the following statements is correct? A variable insurance plan is good when investment conditions are favourable A variable insurance plan is good when the stock market is booming Both the statements above are correct * Both the statements above are wrong 47. Which one of the following statements is correct? Industrial assurance is meant only for industrial workers Industrial assurance is meant for people with low incomes * Both the statements above are correct Both the statements above are wrong 48. Which one of the following statements is correct? A salary savings scheme policy is an industrial assurance plan A salary savings scheme policy can be taken for a SA of Rs.10 lakh Both the statements above are correct Both the statements above are wrong 49. Which one of the following statements is correct? In industrial assurance the lapse rates tend to be high. * In salary savings scheme policies, the lapse rates tend to be high Both the statements above are correct Both the statements above are wrong 50. Which one of the following statements is correct? In industrial assurance plans, the premium is deducted from the pay roll In salary savings scheme plans, the premium is deducted from the pay roll * Both the statements above are correct Both the statements above are wrong 51. Who is benefited if a policy is under the salary savings scheme? The policyholder The insurer The agent All the three above * 52. Which one of the following statements is correct? The premium under a SSS policy is paid monthly The premium under a SSS policy is one twelfth the annual premium Both the statements above are correct *

Both the statements above are wrong

53. Which one of the following statements is correct? In a SSS policy, the policyholder has to ensure that premium is paid * In a SSS policy, the responsibility to pay premium is with the employer Both the statements above are correct Both the statements above are wrong 54. Which one of the following statements is correct? In life insurance, the word rider means the person taking part in horse races In life insurance, the word rider refers to additional clauses * Both the statements above are correct Both the statements above are wrong 55. Which one of the following statements is correct? A rider modifies an existing condition in the policy A rider supplements or adds to an existing condition in the policy * Both the statements above are correct Both the statements above are wrong 56. Which one of the following statements is correct? Riders provide supplementary benefits to the basic plan * No rider is allowed unless the underwriter agrees to the same Both the statements above are correct. Both the statements above are wrong. 57. Which one of the following statements is correct? A premium waiver option is allowed as a rider * The premium on all riders depend on the age of the insured person Both the statements above are correct Both the statements above are wrong 58. Which one of the following statements is correct? The premium on a rider varies according to the basic plan The premium on riders cannot exceed specified limits of the basic premium Both the statements above are correct Both the statements above are wrong 59. Which one of the following statements is correct? There is no death risk cover in an annuity Though called an annuity, the payments may be paid every month Both the statements above are correct * Both the statements above are wrong

60. Which one of the following statements is correct? An annuity is paid only to the person who takes out the annuity policy An annuity is paid only till the death of the person taking out the annuity policy Both the statements above are correct Both the statements above are wrong * 61. Which one of the following statements is correct? An annuity policy guarantees a pension * An annuity policy is issued only after a medical examination Both the statements above are correct Both the statements above are wrong 62. Which one of the following statements is correct? Under an annuity certain policy, the annuity stops after the certain period Under a deferred annuity policy, the annuity commences immediately Both the statements above are correct Both the statements above are wrong * 63. Which one of the following statements is correct? An annuity can be taken only on a single life In a life annuity, the risk of death is covered Both the statements above are correct Both the statements above are wrong * 64. Which one of the following statements is correct? In a deferred annuity policy, the premium has to be paid in a lump sum Annuities purchased during different years may all commence on the same date * Both the statements above are correct Both the statements above are wrong 66. Which one of the following statements is correct? Physically handicapped persons may be given annuities at ordinary rates The amount of annuity depends on the age at which the annuity commences Both the statements above are correct * Both the statements above are wrong 66. State which one of the following statements is correct? In group insurance, a single policy is issued covering many persons A master policy covers servants of a master Both the statements above are correct Both the statements above are wrong 67. State which one of the following statements is correct? *

In group insurance, there is only one proposal to insure many In group insurance, there is only one policy covering many Both the statements above are correct * Both the statements above are wrong

68. State which one of the following statements is correct? In group insurance, the proposal is made by the employer * In group insurance proposals are made by each of the insured Both the statements above are correct Both the statements above are wrong 69 State which one of the following statements is correct? Group insurance covers a large numbers of persons in one policy Group insurance is relatively cheaper than individual insurances Both the statements above are correct * Both the statements above are wrong 70. State which one of the following statements is correct? Salary savings schemes policies are group insurance policies Group insurance policies benefit only employees of big organisations Both the statements above are correct Both the statements above are wrong * 71. State which one of the following statements is correct? In group insurance the premium changes every year * In group insurance the premium is paid by the persons who are covered Both the statements above are correct Both the statements above are wrong 72. State which one of the following statements is correct? The members of a housing society can negotiate for a group insurance policy A sports club can get a group policy for its members Both the statements above are correct * Both the statements above are wrong 73. State which one of the following statements is correct? A bank can take out a group policy for its account holders A finance company can take out a group policy for those taking loans from it Both the statements above are correct * Both the statements above are wrong 74. State which one of the following statements is correct? The amount of cover in a group policy is chosen by individual members The amount of cover for each member is fixed by the terms of the policy

Both the statements above are correct Both the statements above are wrong

75. State which one of the following statements is correct? A master policy is issued in a group insurance policy * Each member in a group policy pays the premium directly to the insurer Both the statements above are correct Both the statements above are wrong 76. Which of the following is true for a group policy? Copies of the master policy are given to all members by the insurer The group has to be formed exclusively for the purpose of insurance Entry into the scheme and exit out of it, is at the option of the members The amount of the cover is determined by the scheme * 77. State which one of the following statements is correct? Group insurance business is growing faster than individual business Group business is socially very relevant Both the statements above are correct * Both the statements above are wrong 78. State which one of the following statements is correct? A trade union can take out a group insurance policy for its members The cover for an employee can be equal to his age multiplied by a fixed number Both the statements above are correct * Both the statements above are wrong 79. State which one of the following statements is correct? A group insurance contract is between the insurer and the insured persons The extent of insurance cover is chosen by each individual member Both the statements above are correct Both the statements above are wrong * 80. State which one of the following statements is correct? The members covered by a group insurance policy changes every year The amount of insurance for any member may change from year to year Both the statements above are correct * Both the statements above are wrong 81. State which one of the following statements is correct? Group insurance is the same as salary savings schemes Premiums under some group policies are paid by governments * Both the statements above are correct Both the statements above are wrong

82. In what respect does group insurance differ from salary savings schemes? The person who pays the premium Responsibility to pay the premium Decision to take the policy In all the above three respects * 83. In what ways does group insurance differ from salary savings schemes? Number of persons insured under a policy Responsibility of employer Issue of premium receipts In all the above three respects * 84. In what ways does group insurance differ from salary savings schemes? Ownership of the policy Mode of payment of premium Parties to the contract In all the above three respects * 85. Who amongst the following can take out a group insurance policy? Office-goers who travel in the same compartment in the suburban train A contractor who engages the same people every day on daily wages A group of travelers on a package tour Members of a toddy tappers association * 86. State which one of the following statements is correct? In group policies, the chance of adverse selection is low In group policies, every person is medically examined Both the statements above are correct Both the statements above are wrong 87. State which one of the following statements is correct? In group policies, each case is separately underwritten In group policies, personal histories are not examined Both the statements above are correct Both the statements above are wrong *

88. State which one of the following statements is correct? Entry into and exit from group cover, is controlled by the terms of the policy The extent of cover is not decided by the life to be insured Both the statements above are correct * Both the statements above are wrong 89. State which one of the following statements is correct?

A group insurance cover is given only if there is a certain minimum number A group policy is not granted if the group has been formed only to avail of cover Both the statements above are correct * Both the statements above are wrong

90. State which one of the following statements is correct? The cover in a group policy could depend on the ages of the lives insured The cover could be a uniform flat rate for all employees of a certain category Both the statements above are correct * Both the statements above are wrong 91. Which of the following could be the basis of the cover in a group policy? Amount of annual income Level in the hierarchy Age of the person All the three above * 92. Which of the following could be the basis of the cover in a group policy? Height of the life insured Age of the life insured * Size of the insureds family All the three above 93. Who pays for the premium in the group policy? The insured persons only The person who has the master policy only Both the insured persons and policyholder jointly Any one of the three ways above * 94. State which one of the following statements is correct? The amount of cover under the master policy does not change The premium under the group policy is the same every year Both the statements above are correct Both the statements above are wrong * 95. Which of the factors below help to avoid adverse selection in group policies? No option to choose quantum of insurance cover * Minimum number to be included in the cover Similarity in the nature of the jobs All the above three factors 96. Which of the factors below help to avoid adverse selection in group policies? Reputation of the employer Records of the employer

No option to choose entry or exit All the above three factors

97. State which one of the following statements is correct? Group superannuation polices provide pensions to retiring employees * A group superannuation policy can be taken by a company for its mortgagees Both the statements above are correct Both the statements above are wrong 98. State which one of the following statements is correct? Group gratuity policies require that trustees be appointed Group superannuation policies require that trustees be appointed Both the statements above are correct * Both the statements above are wrong 99. State which one of the following statements is correct? Trustees have to be appointed in all group policies All group policies need approval of the income tax department Both the statements above are correct Both the statements above are wrong * 100. State which one of the following statements is correct? Employers are required by law to take out group gratuity policies Employers have different options to fund their pension liabilities Both the statements above are correct Both the statements above are wrong

101 State which one of the following statements is correct? Group policies help employers to avoid fluctuations in gratuity outgoes Employees have less anxiety if employers have taken group policies Both the statements above are correct * Both the statements above are wrong 102. State which one of the following statements is correct? Group policies are popular because of legal compulsions Group policies give employees benefits better than legally required * Both the statements above are correct Both the statements above are wrong 103. State which one of the following statements is correct? The scope for group policies is limited by the requirements of the law Group insurance policies can be tailor made to suit specific needs * Both the statements above are correct Both the statements above are wrong

104 State which one of the following statements is correct? Members of a group will get certificates showing details of cover Profit sharing, in group insurance, is worked on actuarial bases Both the statements above are correct * Both the statements above are wrong

CHAPTER 5
UNDERWRITING TEST QUESTIONS

1. What is a proposal? A request for an insurance cover An offer to enter into a contract Both a request and an offer to enter an insurance contract None of the above 2. Which one of the following statements is correct? Selection is the same as underwriting * The underwriter guarantees that the policy monies will be paid Both the statements above are correct Both the statements above are wrong 3. Which one of the following statements is correct? The underwriter assesses the risk No policy can be issued without the underwriters decision Both the statements above are correct * Both the statements above are wrong

4. Which one of the following statements is correct? For a first class life, the premium charged is less than in the tabular rates For a first class life, the vested bonus will be more than in other cases Both the statements above are correct Both the statements above are wrong * 5. Which one of the following statements is correct? The underwriter determines the premium to be charged The underwriter is an employee of the insurer Both the statements above are correct * Both the statements above are wrong

6. Which one of the following statements is correct? An underwriter acts in the interests of the policyholders as a whole An underwriter acts in the interests of the insurance company Both the statements above are correct * Both the statements above are wrong 7. Which one of the following statements is correct? An underwriter charges extra premium for physical hazards An underwriter charges extra premium for moral hazards Both the statements above are correct Both the statements above are wrong 8. Which one of the following statements is correct? A physical hazard affects the probability of death Body measurements may indicate physical hazards Both the statements above are correct * Both the statements above are wrong 9. Financial underwriting is done to evaluate The probability of the policy lapsing in future The possibility of moral hazard * Both lapse and moral hazard probabilities Neither lapse nor moral hazard 10. The underwriters assessment will include The genuineness of the need for insurance The intentions of the proposer in applying for insurance Both genuineness and intentions * Neither genuineness nor intentions 11. Moral hazard may be suspected in cases where The life to be insured is old The insurance is for a very large amount In both the above cases * In neither of the above cases *

12. Which one of the following statements is correct? Moral hazard exists if the proposed SA is ten times or more of the annual income It is possible to quantify the extent of moral hazard and charge extra premium Both the statements above are correct Both the statements above are wrong *

13. Which one of the following statements is correct? An underwriter is an actuary An underwriter uses financial and medical data Both the statements above are correct Both the statements above are wrong

14. Which one of the following statements is correct? A medical referee is an underwriter The medical examination at the stage of the proposal is done by a medical referee Both the statements above are correct Both the statements above are wrong * 15. Which one of the following statements is correct? A medical referee examines the life to be insured The medical referee only sees the reports received by the insurer Both the statements above are correct Both the statements above are wrong

16. Which one of the following statements is correct? The underwriter makes his decision only after the medical referee sees the case The medical referee usually sees only cases for large SA * Both the statements above are correct Both the statements above are wrong 17. Which one of the following statements is correct? A medical referee is an employee of the insurer A medical referee is an underwriter Both the statements above are correct Both the statements above are wrong * 18. Which one of the following statements is correct? In some cases, the underwriter consults the reinsurers before deciding The numerical method of underwriting is the best method Both the statements above are correct Both the statements above are wrong *

19. Which one of the following statements is correct? If the underwriter feels that the risk is more, he will accept at OR If the underwriter feels that the risk is more, he may impose a lien Both the statements above are correct

Both the statements above are wrong *

20. A lien may be imposed by the underwriter if The additional risk is expected to wear off in course of time The proposer is unlikely to agree to pay a higher premium In both the above cases In neither of the above cases 21. Which one of the following statements is correct? A clause restricts the benefits under the policy A clause is the same as a rider Both the statements above are correct Both the statements above are wrong 22. Which one of the following statements is correct? A lien operates for a specific period A clause excludes specific risks Both the statements above are correct * Both the statements above are wrong *

23. Which one of the following statements is correct? Underwriting is done only when there is a medical examination Medical examination is necessary before a policy can be issued Both the statements above are correct Both the statements above are wrong * 24. The system of non medical underwriting is introduced because Medical examiners are not available in all areas Most of the cases are found to be standard lives acceptable at OR Of both the above reasons * Of some other reasons 25. Under the system of non-medical underwriting There is no restriction on age There is no restriction on SA There is restriction on both the SA and age * Only some towns are covered

26. Which one of the following statements is correct? Working women are treated on par with men Educated women are treated on par with men

Both the statements above are correct * Both the statements above are wrong

27. Which one of the following statements is correct? Underwriters are more cautious while considering cases on female lives * Underwriters are more cautious while considering cases of educated women Both the statements above are correct Both the statements above are wrong 28. Which one of the following statements is correct? The agent is expected to make his report commenting on the risk factors The agents report is important for the underwriter Both the statements above are correct * Both the statements above are wrong 29. Which one of the following statements is correct? By writing a truthful report, the agent is helping the insurer By writing a truthful report, the agent is helping the life to be insured Both the statements above are correct * Both the statements above are wrong 30. Which one of the following statements is correct? Smoking is a hazard inviting additional premium Drinking is a hazard inviting additional premium Both the statements above are correct * Both the statements above are wrong 31. Which one of the following statements is correct? Underwriting standards are changing * The underwriting standards of all insurers are the same Both the statements above are correct Both the statements above are wrong 32. Which one of the following statements is correct? Underwriting is the process of verifying the level of risk of each new entrant * Working ladies are charged extra premium, even if there are no impairments Both the statements above are correct Both the statements above are wrong 33. Which one of the following statements is correct? Standard life, normal life, average life, all mean the same thing * The underwriter can definitely detect all attempts at adverse selection Both the statements above are correct Both the statements above are wrong

34. Which one of the following statements is correct? A clause restricts the benefits under the policy A lien operates for a specific period Both the statements above are correct * Both the statements above are wrong 35. Which one of the following statements is correct? In the case of a lien, the amount payable on death will vary from year to year * A lien operates till the policy matures Both the statements above are correct Both the statements above are wrong

CHAPTER 6
INSURANCE DOCUMENTS
TEST QUESTIONS 1. Which one of the following statements is correct? The policy is the basis of the insurance contract The proposal is the basis of the insurance contract Both the statements above are correct Both the statements above are wrong

2. Which one of the following statements is correct? The proposal must be signed by a witness * The answers in the proposal form should be written in English Both the statements above are correct Both the statements above are wrong 3. Which one of the following statements is correct? The proposal must be signed in the language in which it is printed The proposal can be signed in any language * Both the statements above are correct Both the statements above are wrong 4. Which one of the following statements is correct? The proposal must be written by the proposer himself / herself

The proposal can be written by the agent Both the statements above are correct Both the statements above are wrong *

5. Which one of the following statements is correct? The declaration in the proposal must be signed by the proposer * Anybody can sign the proposal form on behalf of an illiterate proposer Both the statements above are correct Both the statements above are wrong 6. Which one of the following statements is correct? The declaration in the proposal makes the principle of good faith operational * The declaration in the proposal establishes insurable interest Both the statements above are correct Both the statements above are wrong 7. Which one of the following statements is correct? The information in the proposal form is used for underwriting Wrong information in the proposal form can nullify the insurance contract Both the statements above are correct * Both the statements above are wrong 8. If the proposal form is filled up in a language not known to the proposer The person who filled up the form has to sign a declaration * The agent has to declare that he had explained the questions and answers All further correspondence must be only in that language The life to be insured must be medically examined 9. Which one of the following statements is correct? Some of the particulars in the proposal form have no bearing on underwriting * The name of the proposed nominee must be mentioned in the proposal Both the statements above are correct Both the statements above are wrong 10. Which one of the following statements is correct? The personal statement must be witnessed by the agent Personal statements are required only in medical cases Both the statements above are correct Both the statements above are wrong * 11. Which one of the following statements is correct? A copy of the proposal has to be given to the proposer * A copy of the medical report has to be given to the proposer Both the statements above are correct

Both the statements above are wrong

12. Which one of the following statements is correct? A copy of the personal statement is to be given to the proposer A copy of the proposal has to be given to the proposer Both the statements above are correct * Both the statements above are wrong 13. Which one of the following statements is correct? The proposer will not be shown the agents report to the insurer The proposer will not be shown the medical examiners report Both the statements above are correct * Both the statements above are wrong 14. Which of the following are confidential and will not be given to the proposer? The medical report The agents confidential report to the insurer The medical referees advice All of the above *

15. The proposal form and personal statement contain information relevant to determine Level of risk Moral hazard Insurable interest All the three * 16. Which one of the following statements is correct? FPR is the evidence of the insurance contract The medical report is the basis of the insurance contract Both the statements above are correct Both the statements above are wrong * 17. Which one of the following statements is correct? The statements in the medical report form part of the insurance contract The medical examiner depends upon the statements in the personal statement * Both the statements above are correct Both the statements above are wrong 18. Which one of the following statements is correct? The FPR is proof of commencement of risk *

Risk does not commence till the policy is signed Both the statements above are correct Both the statements above are wrong

19. The FPR is issued when The first premium is adjusted in the office * The first premium is deposited in the office The underwriter makes his decision Consent of the proposer is received 20. The date of issue of the FPR indicates The date when the risk effectively begins * The date when the next premium falls due The date when the policy will commence None of the above 21. The date of commencement of the policy Cannot be earlier than the date of issue of the FPR Cannot be later than the date of issue of the FPR * Will be the date on which the FPR is received by the proposer Will be the date on which the underwriter decided to accept the proposal 22. The FPR is important Till the policy is issued * Till the claim is settled As evidence of contract in case the original policy is lost To know the terms of acceptance 23. Which one of the following statements is correct? Once the FPR is issued, the policyholder cannot back out of the contract Policies can be back dated to any date within the financial year * FPR is evidence of the insurance contract All the three statements above are wrong 24. Which one of the following statements is correct? The FPR acknowledges premium for the first year of the policy The second quarterly premium after commencement is called renewal premium * Both the statements above are correct Both the statements above are wrong 25. If a policyholder applies for cancellation of policy soon after he receives the FPR, The full premium will be refunded The full premium after some small deductions, will be refunded *

The policy will be treated as lapsed from the next premium due date He will be debarred from taking any further insurance policies

26. If a policyholder has doubts about the policy he has applied for, he can Ask for cancellation within fifteen days of issue of the policy * Ask for cancellation and insist on refund of the full premium paid Wait for the next premium due before taking action Do nothing once the FPR is issued 27. Which one of the following statements is correct? A renewal premium receipt is issued only when all previous dues are paid It is not enough to preserve only the latest renewal premium receipt * Both the statements above are correct Both the statements above are wrong 28. Which one of the following statements is correct? In the case of SSS policies, renewal premium receipts are issued In the case of SSS policies, FPRs are issued * Both the statements above are correct Both the statements above are wrong 29. Which one of the following statements is correct? In the case of SSS policies, the employer gets the renewal premium receipts In the case of SSS policies, FPRs are not issued Both the statements above are correct Both the statements above are wrong * 30. Which one of the following statements is correct? In the event of a dispute, the policy document will be referred to * In the event of a dispute, the underwriting decision in the file will be referred to Both the statements above are correct Both the statements above are wrong 31. Which one of the following statements is correct? A policy is specific and relevant only to a particular contract * A policy is a specimen, applicable to all cases under a specified plan Both the statements above are correct Both the statements above are wrong 32. Which one of the following statements is correct? An endorsement may be placed on the policy at the very beginning The nomination may be made later by an endorsement Both the statements above are correct * Both the statements above are wrong

33. Which one of the following statements is correct? The schedule of the policy will be changed when there is a change in plan The change in terms will be made by endorsements * Both the statements above are correct Both the statements above are wrong 34. Which one of the following statements is correct? The schedule of a policy is not altered after the policy is issued Changes in the terms of the policy are made through endorsements Both the statements above are correct * Both the statements above are wrong 35. Which one of the following statements is correct? The amount of vested bonus can be seen from an endorsement on the policy When a policy is converted, an endorsement is made on the policy * Both the statements above are correct Both the statements above are wrong 36. Which one of the following statements is correct? IRDA has prescribed proposal forms for all insurers Renewal premium cannot be paid without the renewal notice Both the statements above are correct Both the statements above are wrong * 37. Which one of the following statements is correct? Every endorsement must be typed on or attached to policy Endorsements on a policy form part of the insurance contract Both the statements above are correct * Both the statements above are wrong 38. Which one of the following statements is correct? If policy document is lost, the insurance contract becomes void The family history appears in the personal statement * Both the statements above are correct Both the statements above are wrong 39. Which one of the following statements is correct? FPR is a cash receipt. * Renewal premium cannot be paid without the renewal notice Both the statements above are correct Both the statements above are wrong 40. Which one of the following statements is correct?

Clauses modify the conditions in the policy. Endorsements modify the conditions in the policy. Both the statements above are correct * Both the statements above are wrong

CHAPTER 7
POLICY CONDITIONS TEST QUESTIONS 1. If the age proof submitted along with proposal is later found to be false, the insurer May declare the policy null and void ab initio May revise the premium on the basis of the actual age from the commencement May revise the premium and other terms of the contract May do any one of the three suggested above * 2. Which one of the following statements is correct? Age is material information and may affect the terms of underwriting * If age is found to be different, the only effect is on the premium rate Both the statements above are correct Both the statements above are wrong 3. Age is material for underwriting because it affects The amount of premium The decision to call for medical examinations and tests The plan that can be offered All the three factors above * 4. Which one of the following statements is correct? Age is important for the underwriter to consider the need for medical tests Age is material to decide on the plan that can be offered Both the statements above are wrong Both the statements above are correct * 5. Which one of the following statements is correct? The days of grace depends on the frequency of premium payment The number of days of grace may be 30 or 31 Both the statements above are correct * Both the statements above are wrong

6. Which one of the following statements is correct? If premium is paid within the days of grace, there is no penalty If premium is not paid within the days of grace, the policy lapses Both the statements above are correct * Both the statements above are wrong 7. Which one of the following statements is correct? In the case of SSS policies, the grace period is one month If the due date is 27th February the grace period ends on 26th march Both the statements above are correct Both the statements above are wrong * 8. If the premium was due on 15th July and 16th August is a Sunday The grace period will end on 14th August (Friday) The grace period will end on 15th August (Saturday) The grace period will end on 17th August (Monday) * The grace period will end as per the discretion of the insurer 9. If the monthly premium was due on 24th February in a leap year (Tuesday) The grace period will end on 9th March (Tuesday) The grace period will end on 10th March (Wednesday) * The grace period will end on 11th March (Thursday) The grace period will end on 24th March (Wednesday) 10. Which one of the following statements is correct? If death occurs in grace period, the premium due is waived The date of payment of premium is the date on which the cheque is cleared Both the statements above are correct Both the statements above are wrong * 11. Which one of the following statements is correct? Premiums have to be paid by cash or cheque Premium can be paid electronically Both the statements above are correct * Both the statements above are wrong 12. Which one of the following statements is correct? When a policy lapses, the contract comes to an end * When a policy lapses, nothing further is payable under it Both the statements above are correct Both the statements above are wrong 13. Which one of the following statements is correct?

A premium paid within the grace period is a payment made on the due date A policy is not considered to have lapsed during the days of grace Both the statements above are correct * Both the statements above are wrong

14. Which one of the following statements is correct? When a policy lapses, the policyholder loses everything When a policy lapses, some benefits are protected * Both the statements above are correct Both the statements above are wrong

15. Which one of the following statements is correct? When a policy lapses after 5 years, the insurance cover becomes zero If the insured dies during the days of grace, the claim will be admitted Both the statements above are correct Both the statements above are wrong

16. Which one of the following statements is correct? The non-forfeiture clauses are relevant only when the premium is not paid * The non-forfeiture clauses operate when the loan interest is not paid Both the statements above are correct Both the statements above are wrong 17. Non-forfeiture provisions exist because It is not fair to the policyholders to deny everything to the policyholder The Insurance Act does requires it There is an accumulated reserve under the policy For all the above reasons * 18. Which one of the following is not a non-forfeiture option? Policy becomes paid up Grace period * Automatic advance of premium Payment of surrender value 19. Which one of the following statements is correct? The provision of grace period is a non-forfeiture option Grant of a loan under a policy is non-forfeiture option Both the statements above are correct Both the statements above are wrong *

20 Which one of the following statements is correct? Surrender value factor increases with the duration elapsed * When a policy lapses, all vested bonuses are forfeited Both the statements above are correct Both the statements above are wrong 21. Which one of the following statements is correct? The reserve accumulates under a policy because of level premiums * The reserve does not accumulate in money back policies Both the statements above are correct Both the statements above are wrong

22. Which one of the following statements is correct? Paid up value is subject to deduction of unpaid premiums When a policy is paid up, the surrender value option is lost Both the statements above are correct Both the statements above are wrong * 23. Which one of the following statements is correct? Vested bonus is also reduced along with SA in paid up cases Paid up option is effective from date of first unpaid premium * Both the statements above are correct Both the statements above are wrong 24. Which one of the following statements is correct? Paid up option is effective from date of first unpaid premium * Paid up option is effective from policy anniversary after unpaid premium Both the statements above are correct Both the statements above are wrong 25. Which one of the following statements is correct? A paid up policy is entitled to further bonuses A paid up policy is entitled to further bonuses if it is a with profits policy Both the statements above are correct Both the statements above are wrong * 26. Which one of the following statements is correct? A policy is made paid up only if the paid up value is of a minimum amount If the paid up value is not up to a level, the cash value is paid Both the statements above are correct *

Both the statements above are wrong

27. Which one of the following statements is correct? When premium is advanced from surrender value, the policy does not lapse The premium advanced under the non-forfeiture option, remains a debt Both the statements above are correct * Both the statements above are wrong 28. Which one of the following statements is correct? In cases of automatic advance of premium, policies are entitled to bonus Paid up policies are entitled to bonus Both the statements above are correct Both the statements above are wrong 29. Which one of the following statements is correct? In cases of automatic advance of premium, the surrender value increases In cases of paid up polices, the surrender value increases Both the statements above are correct * Both the statements above are wrong 30. In what aspect is automatic premium advance same as extended term assurance? In amount of SA payable on death * In amount of SA payable on maturity In the extent of debt on the policy at the time of claim In the right to bonus 31. How does automatic advance of premium differ from extended term assurance? In the duration for which the policy will remain in force * In the amount of SA payable on death In the ease of reviving the policy to original terms Likelihood of terminating without any cash payment to the policyholder 32. Which one of the following statements is correct? In extended term assurance option, the full instalment premium is advanced In automatic premium advance option, the full instalment premium is advanced* Both the statements above are correct Both the statements above are wrong 33. Which of the following aspects are common to the three non-forfeiture options? They seek to protect the policyholders interests * The extent of insurance cover on death The extent of debt on the policy The amount payable on maturity *

34. In which of the following aspects do the three non-forfeiture options differ? The extent of insurance cover The amount of debt on the policy The amount payable on maturity On all the above three * 35. Which one of the following statements is correct? When a policy lapses, it is beneficial to the insurer When a policy lapses, it is beneficial to the other policyholders Both the statements above are correct Both the statements above are wrong * 36. Which one of the following statements is correct? When a policy lapses, the agents prospect for new business improves When a policy lapses, the insurer benefits as his liability ceases Both the statements above are correct Both the statements above are wrong * 37. Which one of the following statements is correct? A lapse is effectively a case of adverse selection A lapse should make the agent reflect on the correctness of the sale Both the statements above are correct * Both the statements above are wrong 38. Which one of the following statements is correct? A policy lapses only when the policyholder decides that he does not want it A lapse may happen because of temporary financial difficulties * Both the statements above are correct Both the statements above are wrong 39. Which one of the following statements is correct? A revival is the opposite of a lapse * The policyholder can, at any time, demand that the lapsed policy be revived Both the statements above are correct Both the statements above are wrong 40. Which one of the following statements is correct? A revival is as important as a new proposal for insurance * A revival is done only on evidence of continued good health Both the statements above are correct Both the statements above are wrong

41. Which one of the following statements is correct? Revivals are in the interest of the policyholders Revivals are in the interest of the insurers Both the statements above are correct * Both the statements above are wrong 42. Which one of the following statements is correct? Revivals are not done unless the entire outstanding premium is paid Revivals are not done unless the underwriter agrees Both the statements above are correct Both the statements above are wrong * 43. Which one of the following statements is correct? The requirement of medical examination varies according to the duration of lapse The requirement of medical examination depends on the SA Both the statements above are correct * Both the statements above are wrong 44. Which one of the following statements is correct? Whenever a policy is revived, a new policy is issued Whenever a policy is revived, endorsements are placed on the policy Both the statements above are correct Both the statements above are wrong * 45. Which one of the following statements is correct? When only balance premiums are required, the revival is automatic When evidence of good health is required, the underwriter decides on revival Both the statements above are correct * Both the statements above are wrong 46. Which one of the following statements is correct? On revival, the relevant SA for underwriting is the original SA On revival, the relevant SA for revival is the original SA less paid up value * Both the statements above are correct Both the statements above are wrong 47. Which one of the following statements is correct? A revived policy effectively, is a new contract. Duty to disclose all material facts, revives on revival Both the statements above are correct * Both the statements above are wrong 48. Which one of the following statements is correct?

Errors in the statements made at the time of revival can nullify the policy * The principle of utmost good faith does not apply at the time of revival Both the statements above are correct Both the statements above are wrong

49. Which one of the following statements is correct? On revival, the original terms of the policy will not be affected On revival, the original terms of the policy may be changed * Both the statements above are correct Both the statements above are wrong 50. Which one of the following statements is correct? The terms of a revived policy will be the same as the original On revival, the original terms of the policy may be changed * Both the statements above are correct Both the statements above are wrong .51 Which one of the following statements is correct? An assignment changes the title to the policy A nomination does not change the title to the policy Both the statements above are correct * Both the statements above are wrong 52. Which one of the following statements is correct? When a nomination is made, the rights to the policy are transferred The assignee immediately becomes the policyholder * Both the statements above are correct Both the statements above are wrong 53. Which one of the following statements is correct? An assignee can only act under instructions of the assignor An assignee is the absolute owner of the policy * Both the statements above are correct Both the statements above are wrong 54. Which one of the following statements is correct? An assignment can be cancelled at any time by the assignor A nomination can be cancelled at any time by the life insured * Both the statements above are correct Both the statements above are wrong 55. Which one of the following statements is correct? An absolute assignment holds good even after maturity A nomination holds good only till maturity

Both the statements above are correct Both the statements above are wrong

56. Which one of the following statements is correct? In an assignment, property is transferred * When a nomination is made, property is transferred Both the statements above are correct Both the statements above are wrong 57. Which one of the following statements is correct? The assignment can be made on a separate paper The nomination can be made on a separate paper Both the statements above are correct Both the statements above are wrong *

58. Which one of the following statements is correct? An assignment is effective as soon as it made A nomination is effective when it is registered by the insurer Both the statements above are correct * Both the statements above are wrong 59. Which one of the following statements is correct? An assignment is to be notified to the insurer in order to become effective A nomination is to be notified to the insurer to become effective * Both the statements above are correct Both the statements above are wrong 60. A policy which has been assigned, will revert to the assignor If the assignor survives till maturity Whenever the assignor demands it When the conditions specified in a conditional assignment happen * On maturity of the policy 61. A policy which has been assigned absolutely, will revert to the assignor When the assignee reassigns the policy * Whenever the assignor likes it to happen When the policy becomes a claim When the assignee dies 62. A policy which has been assigned, will revert back to the assignor When the purpose for which it was assigned is not valid any more When the policy becomes a claim When the nominee under the policy dies When the policy is assigned back by the assignee *

63. Which one of the following statements is correct? The nomination becomes invalid when the policy is assigned * The assignee can make a fresh nomination Both the statements above are correct Both the statements above are wrong 64. Which one of the following statements is correct? On maturity, the nomination is automatically ineffective * The nominee can collect maturity proceeds if the policyholder dies Both the statements above are correct Both the statements above are wrong 65. Which one of the following statements is correct? A childrens deferred policy can be assigned any time A nomination can be made under a childrens deferred policy after vesting date Both the statements above are correct * Both the statements above are wrong 66. Which one of the following statements is correct? The nomination is intended to make claim settlements easier * Only heirs to the policyholder can become nominees Both the statements above are correct Both the statements above are wrong 67. Which one of the following statements is correct? The nomination can only be in favour of one person The nomination can be in favour of more than one person Both the statements above are correct Both the statements above are wrong

68. Which one of the following statements is correct? In the case of many nominees, the claim will be paid to them jointly * In the case of many nominees, the claim will be divided among them Both the statements above are correct Both the statements above are wrong 69. Which one of the following statements is correct? A nomination can be made even before the policy commences A nomination can be made only by the insured himself Both the statements above are correct * Both the statements above are wrong

70. Which one of the following statements is correct? Assignee is free from the assignors obligations under the policy A nomination is automatically cancelled when a loan is taken under the policy Both the statements above are correct Both the statements above are wrong * 71. Which one of the following statements is correct? A nominee must be above 18 years of age A nominee must be a close relative Both the statements above are correct Both the statements above are wrong * 72. Which one of the following statements is correct? Only heirs of the insured can be nominees under a life insurance policy A person to whom one owns moneys can be made a nominee * Both the statements above are correct Both the statements above are wrong 73. Which one of the following statements is correct? A nomination can be made in favour of an institution * A nomination takes away the rights of the heirs to the insured person Both the statements above are correct Both the statements above are wrong 74. Which one of the following statements is correct? The nominee becomes the owner of the policy The nominee becomes an heir to the insured person Both the statements above are correct Both the statements above are wrong * 75. Which one of the following statements is correct? If the nominee is a minor, the claim can be paid to the guardian If the nominee dies, the claim can be paid to the heirs of the nominee Both the statements above are correct Both the statements above are wrong * 76. Which one of the following statements is correct? If the assignee is dead, the claim can be paid to the assignees heirs * An assignee can make a nomination under the policy Both the statements above are correct Both the statements above are wrong 77. Which one of the following statements is correct?

An assignee can assign the policy further to another person The assignee can take a loan under the policy Both the statements above are correct * Both the statements above are wrong

78. Which one of the following statements is correct? The nominee can make a further nomination under the policy The assignee can make a nomination Both the statements above are correct Both the statements above are wrong * 79. Which one of the following statements is correct? The claim amount, when paid, belongs to the nominee The claim amount belongs to the heirs of the deceased * Both the statements above are correct Both the statements above are wrong 80. Which one of the following statements is correct? An assignee becomes the policyholder * The nominee becomes the policyholder Both the statements above are correct Both the statements above are wrong 81. Which one of the following statements is correct? A nomination can be made in joint life policies A joint life policy can be assigned Both the statements above are correct * Both the statements above are wrong 82. Which one of the following statements is correct? The policy has to be given to the insurer at the time of surrender The policy has to be given to the insurer at the time of taking a loan Both the statements above are correct * Both the statements above are wrong 83. Which one of the following statements is correct? When a loan is taken, the policy is surrendered Loans are given only on policies that are in full force Both the statements above are correct Both the statements above are wrong * 84. Which one of the following statements is correct? The amount of loan can be more than the surrender value Loans are available on paid up policies *

Both the statements above are correct Both the statements above are wrong

85. Which one of the following statements is correct? A policy is foreclosed when the loan is not repaid A policy is foreclosed at the time of claim Both the statements above are correct Both the statements above are wrong * 86. Which one of the following statements is correct? Foreclosure action is taken when interest is outstanding for two years Foreclosure action is taken when loan plus interest equals surrender value * Both the statements above are correct Both the statements above are wrong 87. Which one of the following statements is correct? Loans are not granted under term assurance policies Loans are not granted under whole life policies Both the statements above are correct Both the statements above are wrong *

88. Which one of the following statements is correct? When a loan is taken under the policy the nomination is cancelled A loan will be paid only when the policy is assigned to the insurer Both the statements above are correct * Both the statements above are wrong 89. Which one of the following statements is correct? The rates of interest on loans are fixed by the IRDA The rates of interest on loans are fixed by the Reserve Bank of India Both the statements above are correct Both the statements above are wrong * 90. Which one of the following statements is correct? Outstanding amounts of loans are deducted from the claim amount * Fresh loans cannot be taken till the earlier loan is repaid Both the statements above are correct Both the statements above are wrong 91. Which one of the following statements is correct? Foreclosure action cannot be taken till a notice is served on the policyholder * When a foreclosure action is taken, nothing is payable to the policyholder Both the statements above are correct Both the statements above are wrong

92. Which one of the following statements is correct? A policy which is foreclosed can be reinstated * Wife is automatically the beneficiary under a MWP Act policy Both the statements above are correct Both the statements above are wrong 93. Which one of the following statements is correct? Foreclosure can be done only with the consent of the policyholder Foreclosure can be done only after informing the policyholder * Both the statements above are correct Both the statements above are wrong 94. When a policy is foreclosed, the insurer will Pay the balance moneys to the nominee Offer to reinstate the policy on original terms Pay balance surrender after adjustment of all outstanding dues * Do none of the above 95. When a policy is foreclosed, it benefits The policyholder The insurer Both the policyholder and the insurer Neither the policyholder nor the insurer * 96. Which one of the following statements is correct? No alteration can be made without the request of the policyholder Some kind of alterations do not require the consent of the insurer Both the statements above are correct * Both the statements above are wrong 97. Which one of the following statements is correct? An alteration necessarily changes the terms of the insurance contract No alteration can be made without the approval of the underwriter Both the statements above are correct Both the statements above are wrong * 98. Which one of the following statements is correct? Alterations are generally allowed if they do not affect the risk Alterations are generally allowed if they do not increase the risk Both the statements above are correct * Both the statements above are wrong

99. Which one of the following statements is correct? A change of nomination is an alteration requiring insurers consent A change of mode of premium requires insurers consent Both the statements above are correct Both the statements above are wrong * 100. Which one of the following statements is correct? Section 45 of the Insurance Act deals with nominations Indisputability clause does not apply to childrens policies Both the statements above are correct Both the statements above are wrong * 101. Which one of the following statements is correct? The Insurance Act does not protect those who try to cheat the insurer Section 45 does not apply if the policy had been revived within a year Both the statements above are correct * Both the statements above are wrong 102. Which one of the following statements is correct? A MWP Act policy can be assigned Loans are not granted under MWP Act policies Both the statements above are correct Both the statements above are wrong

103. Under a MWP Act policy, the beneficiaries Must be specified at the commencement of the policy * Can be specified at any time during the course of the policy May be specified even after the claim has arisen Are determined by the law 104 If a policy is under the MWP Act, It can be surrendered by the beneficiaries A loan can be taken by the trustees It can be made paid up * It can be assigned 105. If a policy is under the MWP Act, the policyholder is The life insured The beneficiaries The trustee * The administrator 106. Which one of the following statements is correct? The beneficiaries under the MWP Act can be any member of the family

A policy can be taken under the MMWP Act for the benefit of parents Both the statements above are correct Both the statements above are wrong *

107. Which one of the following statements is correct? Brothers and sisters cannot be beneficiaries under the MWP Act * A policy under the MWP Act is the property of the life insured Both the statements above are correct Both the statements above are wrong 108. Which one of the following statements is correct? The beneficiaries permitted under the MWP Act depend also on religion A MWP Act policy cannot be surrendered Both the statements above are correct * Both the statements above are wrong 109. Which one of the following statements is correct? A change of job after the commencement of policy affects the terms of policy The life insured can change his job only with the consent of the insurer Both the statements above are correct Both the statements above are wrong *

WORK-BOOK
1. Find out surrender value, on the basis of following data, (the answer to be rounded off to the next lower rupee) . DOC- 13.7.2001, Endowment without profit 25 years Due date of last premium paid 13.07.2006 : Yearly mode SA Rs.50,000/- surrender value quotation required on 01.09.2007 SV factor 5 yrs 23.91%, 6 yrs 24.63%, 7 yrs 26.48% (a) 2869 (b) 2955 * (c) 3177 (d) none of these

2. Find out loan available at 90% of surrender value on the basis of following data (the answer to be rounded off to the next lower rupee . DOC- 13.7.2001, Endowment without profit 25 years Due date of last premium paid 13.07.2006 : yearly mode SA Rs.50,000/- surrender value quotation required on 01.09.2007 SV factor 5 yrs 23.91%, 6 yrs 24.63%, 7 yrs 26.48% (a) 2682 (b) 2660 * (c) 2840 (d) none of these

3. Find out surrender value, on the basis of following data, the answer to be rounded off to the next lower rupee . DOC- 15.6.1992, Endowment with profit 30 years SA Rs.30,000/- mode half yearly Due date of last premium paid 15-06-2007 Accrued bonus Rs.750/- per thousand SA, SV factor 23% (a) 3670 (b) 3765 (c) 8740 * (d) none of these

4. Find out loan available at 90% of surrender value on the basis of following data, the answer to be rounded off to the next lower rupee DOC- 15.6.1992, Endowment with profit 30 years SA Rs.30,000/- mode half yearly Due date of last premium paid 15-06-2007 Accrued bonus Rs.750/- per thousand SA, SV factor 23% (a) 3303 (b) 3388 (c) 7666 * (d) none of these

5. Find out the surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee DOC- 20.02.1993, Endowment with profit 20 years SA. Rs.60,000/- mode quarterly Due date of last premium paid 20-05-2007 Accrued bonus Rs.1095/- per thousand SA. SV factor 60% (a) 23490 (b) 26100 (c) 65520 * (d) none of these

6. Find out the loan payable at 90% of surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee DOC- 20.02.1993, Endowment with profit 20 years SA Rs.60,000/- mode quarterly Due date of last premium paid 20.05-2007 Accrued bonus Rs.1095 per thousand SA. SV factor 60% (a) 23490 (b) 58968 * (c) 65520 (d) none of these

7. Find out the loan payable at 90% of surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee

DOC- 19.2.2002, Endowment without profit 20 years SA Rs.50,000/- mode yearly Due date of last unpaid premium 19-02-2006 Bonus declared Rs. 60 per thousand SA every year since 2001 SV factor 32% (a) 3600 * (b) 8784 (c) 9760 (d) none of these

8.. Find out the loan payable at 90% of surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee DOC- 14.11.2001, Endowment without profit 20 years SA Rs.1,00,000/- mode half yearly Due date of last premium paid 14-5-2007 SV. 31% (a) 7773 (b) 8370 * (c) 9068 (d) none of these 9. Find out the loan payable at 90% of surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee DOC- 13.7.1990, Endowment with profit 25 years SA. Rs.50,000/- mode quarterly Due date of last unpaid premium 13-04-2007 Premium amount rs.450/- SV. factor 56% Bonus is Rs.960 per thousand. Interim bonus rate was Rs.75/-. (a) 35089 (b) 43815 (c) 47124 (d) none of these 10. .Find out the loan payable at 90% of surrender value on the basis of the following data, the answer to be rounded off to the next higher rupee DOC 25.9.1991, Endowment without profits 31 years SA Rs.40,000/- due date of last quarterly premium paid 15-12-2006 Bonus vested Rs.34,000/-, SV required on 05.04.2007 SV factor duration 14 yrs 22%, 15 yrs 25%, 16 yrs 30% (a) 8325 (b) 12750 * (c) 14580 (d) none of these

CHAPTER 8 CLAIMS
TEST QUESTIONS 1. What is meant by a claim under an insurance policy? Any demand made by the policyholder on the insurer A demand to fulfill the policyholders obligations A demand to fulfill the insurers obligations *

All the three above

2. When does a claim arise under an insurance policy? Whenever the policyholder feels the need for money When the insured events happen * When a premium is not paid Whenever any of the three things mentioned above happen 3. The insurer will not pay a claim unless The event insured against, happens * The policyholder himself makes a demand The nominee makes a demand When all the three things mentioned above happen 4. Which one of the following statements is correct? A request for a loan is considered as a claim A request for surrender of policy is considered a claim Both the statements above are correct Both the statements above are wrong * 5. Which one of the following statements is correct? A claim will be paid as soon as the death of the insured is confirmed An insurer makes enquiries to establish that death took place Both the statements above are correct Both the statements above are wrong * 6. Which one of the following statements is correct? An insurer makes enquiries to establish the fact of death The insurer makes enquiries to check facts stated in the proposal * Both the statements above are correct Both the statements above are wrong 7. Which one of the following statements is correct? The insurer makes enquiries only in the case of death claims * The insurer makes enquiries in the case of maturity claims also Both the statements above are correct Both the statements above are wrong

8. Which one of the following statements is correct? The insurer makes enquiries in the case of all death claims The insurer makes enquiries only in the case of early claims Both the statements above are correct

Both the statements above are wrong

9. Which one of the following statements is correct? A death claim within two years of commencement is treated as an early claim A death claim within two years of revival is treated as an early claim Both the statements above are correct * Both the statements above are wrong 10. Which one of the following statements is correct? A death claim within two years of revival is treated as an early claim * A death claim within two years of an alteration is treated as an early claim Both the statements above are correct Both the statements above are wrong 11. Which one of the following statements is correct? The insurer waits for a demand before taking action in maturity claim cases The insurer takes action in a death claim case after a demand is made on it * Both the statements above are correct Both the statements above are wrong 12. Which one of the following statements is correct? Maturity claims are paid to policyholders Maturity claims are paid to assignees Both the statements above are correct * Both the statements above are wrong 13. Which one of the following statements is correct? Maturity claim cheques are paid to the trustees in a MWP Act case * Maturity claim cheques are paid to the beneficiaries in a MWP Act case Both the statements above are correct Both the statements above are wrong 14. Which one of the following statements is correct? Maturity claim cheques are paid to the policyholder in MWP Act cases Maturity claim cheques are paid to the trustees in a MWP Act case * Both the statements above are correct Both the statements above are wrong 15. Which one of the following statements is correct? The death claim is settled in favour of the nominee in MWP Act cases The death claim is settled in favour of the trustee in MWP Act cases * Both the statements above are correct Both the statements above are wrong

16. Which one of the following statements is correct? Maturity proceeds are paid to the nominee, if the policyholder dies earlier Maturity proceeds are paid to the heirs, if the policyholder dies earlier * Both the statements above are correct Both the statements above are wrong 17. Which one of the following statements is correct? No claim is paid unless the original policy is surrendered Claim can be paid even without the original policy, if it is lost * Both the statements above are correct Both the statements above are wrong 18. Which one of the following statements is correct? Claims may be paid on the basis of indemnity, if title is not established Claims may be paid on the basis of indemnity, if original policy is lost Both the statements above are correct * Both the statements above are wrong 19. Which one of the following statements is correct? The claim may be repudiated, if the age is found to be different Insurer need not wait for formal death intimation * Both the statements above are correct Both the statements above are wrong 20. Before paying a claim, which of the following have to be verified? Premiums paid till date Balance of loan, if any Title of claimant All the three mentioned above * 21. Before paying a claim, which of the following have to be verified? Age of the life insured * Age of the nominee Age of the assignee, if any All of the above 22. Before paying a death claim, which of the following have to be verified? Proof of death of life insured Receipts of all premiums paid from commencement Entitlement for accident benefits All of the above * 23. Which one of the following statements is correct? If a person is missing for seven years, the claim is called a death claim

A claim can be admitted if the life insured is not heard of for seven years Both the statements above are correct * Both the statements above are wrong

24. Which one of the following statements is correct? In the case of a missing person, the claim arises from the date he is missing In the case of a missing person, premiums have to be paid till court judgment * Both the statements above are correct Both the statements above are wrong 25. Which one of the following statements is correct? Action is initiated by the insurer well before the date of maturity The rightful claimant in the case of maturities is the policyholder or assignee Both the statements above are correct * Both the statements above are wrong 26. Which one of the following statements is correct? All maturity claims are paid in one lump sum All death claims are paid in one lump sum Both the statements above are correct Both the statements above are wrong * 27. Which one of the following statements is correct? A maturity claim is finally settled on the date of maturity A death claim, after admission, may be paid years later * Both the statements above are correct Both the statements above are wrong 28. Which one of the following statements is correct? A claim may be paid in instalments only if there is a prior request A maturity claim may be payable years after the date of maturity * Both the statements above are correct Both the statements above are wrong 29. Which one of the following statements is correct? A survival benefit is settled like a maturity claim * A survival benefit is paid to the nominee if the policyholder dies Both the statements above are correct Both the statements above are wrong 30. Which one of the following statements is correct, if trustee is not appointed? A claim under the MWP Act policy will be paid to the official trustee * A claim under the MWP Act policy will be paid to the beneficiaries Both the statements above are correct

Both the statements above are wrong

31. Which one of the following statements is correct? Survival benefits may be settled on indemnity basis, if original policy is lost Survival benefits have to be endorsed on the policy * Both the statements above are correct Both the statements above are wrong 32. Which one of the following statements is correct? If original policy is lost, duplicate policy is necessary for survival benefits * If original policy is lost, duplicate policy is necessary for maturity payments Both the statements above are correct Both the statements above are wrong 33. Which one of the following statements is correct? A policy reported to be lost, may actually have been assigned A policy has no value after the payment of survival benefits Both the statements above are correct Both the statements above are wrong *

34. Which one of the following statements is correct? No claim can be paid without either the original or the duplicate policy No maturity claim can be paid without the life insureds signature Both the statements above are correct Both the statements above are wrong * 35. Which one of the following statements is correct? A survival benefit is paid only to the life insured A death claim can be paid only to the nominee Both the statements above are correct Both the statements above are wrong * 36. In which of the following cases, is the maximum documents asked for? Death claim * Maturity claim Survival benefits Annuity cases 37. In which of the above cases, will the help of the agent be most useful? Death claims * Maturity claims Survival benefits Annuity cases

38. In which of the above cases, is the claimant likely to feel most anxious? Death claim within two years * Surrender cases Applications for loans Survival benefit cases 39. Why are enquiries made in the case of early claim? To ensure that there is no misstatement of facts To protect the interests of the community of policyholders To protect the interests of the insurers For all the above reasons * 40 Why are enquiries made in the case of early claims? To confirm that the underwriting decision was not incorrect To confirm the validity of the mortality table used To check whether underwriting policies need change For none of the above reasons * 41. Which one of the following statements is correct? The insurer can initiate action even before a death claim intimation is received A death claim intimation does not establish that the life insured has actually died Both the statements above are correct * Both the statements above are wrong 42. Which one of the following statements is correct? Frauds are more likely in death claim cases than in maturity cases If the life insured had died one month before maturity date, it is a death claim Both the statements above are correct * Both the statements above are wrong 43 Which one of the following statements is correct? Requirements should be called within 15 days of receipt of the claim Interest is payable on delayed claim payments Both the statements above are correct * Both the statements above are wrong 44 Which one of the following statements is correct? A lunatic policyholder can give a valid discharge For settlement of death claim, hospital discharge certificate is necessary Both the statements above are correct Both the statements above are wrong * 45 Which one of the following statements is correct? Suicide five years after commencement of policy, is not an accident

Agent has a big role in claim processing Both the statements above are correct * Both the statements above are wrong

46. If a life insured has died a few days before date of maturity, but after signing discharge form, to whom should the claim be paid? Nominee * Surviving heirs The policyholders bank account Any of the three above

47. Which one of the following statements is correct? Coroners report is necessary in all death claim cases Special reports are avoided in early death cases if death occurred in a hospital Both the statements above are correct Both the statements above are wrong * 48. If a policyholder had signed the maturity discharge form but dies in an accident before the maturity date, Only the maturity amount will be payable to the heirs The maturity amount will be payable to the nominee Double the SA will be payable as a death claim to the nominee * Double the SA will be payable to the heirs 49. If a policyholder died before collecting the survival benefit in a money back policy, The survival benefit will be paid along with the death claim to nominee The survival benefit will be paid to the heirs and not the nominee * The death claim will be paid to the heirs along with the survival benefit The survival benefit will not be paid to anyone 50. Which one of the following statements is correct? The statement from the employer is required in all death claim cases The coroners report is required in accident cases * Both the statements above are correct Both the statements above are wrong 51. Which one of the following statements is correct? Death certificate is required to be produced in all death claim cases * Police inquest report is required in all death claim cases Both the statements above are correct Both the statements above are wrong

52 Which one of the following statements is correct? Enquiries are made in early death claims if SA exceeds Rs. 1 lakh Early death claims in non-medical cases are settled without enquiries Both the statements above are correct Both the statements above are wrong * 53. Which of these is not enough to claim policy monies? Succession certificate Probate of will A court decree An agreement between the heirs * 54. Which one of the following statements is correct? An indemnity bond is asked for when there is no clear proof of title An indemnity bond is not necessary when there is a probate of a will Both the statements above are correct * Both the statements above are wrong 55. Which one of the following statements is correct? When a claimant produces the original will, no further proof is necessary An affidavit filed before a court by the heirs is adequate evidence of title Both the statements above are correct Both the statements above are wrong * 56. Which one of the following statements is correct? An indemnity bond is necessary when the heirs challenge the nomination Heirs claiming the policy monies must be asked to obtain court decrees * Both the statements above are correct Both the statements above are wrong 57. Which one of the following statements is correct? If there is no decree from a court, the insurer can pay death claim to the nominee * If any dispute is raised, the insurer should avoid paying death claim to nominee Both the statements above are correct Both the statements above are wrong 58. Which one of the following statements is correct? A will can be challenged * If there are two wills, the insurer should act according to the later one Both the statements above are correct Both the statements above are wrong 59. Which one of the following statements is correct?

If there is an assignment, the will is not valid * If there is a nomination, the will is not valid Both the statements above are correct Both the statements above are wrong

60. Which one of the following statements is correct? A will is valid only after a probate is obtained from a court An insurer can make payment to the nominee without waiting for probate of will Both the statements above are correct * Both the statements above are wrong 61. When a court orders that a missing insured person is presumed to be dead, The premiums paid since his disappearance are returned along with the claim The date of death is taken to be the date of court order * Enquiries will be made as in the case of early death claims Suicide clause will operate if the person was missing within one year of policy 62. In the case of an insured person presumed to be dead The insurer has to come to a conclusion on the facts as presented to it The insurer has to act on the instructions of a court of law * The accident benefit will become payable The policy will be deemed to be paid up from the date he is missing 63. In the case of an insured person presumed to be dead The court orders must be produced * The police report is necessary The coroners report will be called for It must be registered in the municipality 64. A missing person will be presumed to be dead only after Three years Five years Seven years * Nine years 65. Which one of the following statements is correct? In the case of missing persons, a court has to order presumption of death * When a person is missing for six years, the insurer can pay the death claim Both the statements above are correct Both the statements above are wrong 66 Which one of the following statements is correct? If a passenger in an air crash is not traced later, the missing person rule applies If a passenger on a ship is missing, the captains statement is proof of death *

Both the statements above are correct Both the statements above are wrong

67. Which one of the following statements is correct? If an insured person is missing after an earthquake, the seven year rule applies If a person aboard a ship is missing, the captains statement is proof of death * Both the statements above are correct Both the statements above are wrong 68. If an insured person in a town hit by a typhoon and floods is missing thereafter Presumption of death can be done only after seven years Insurers may act upon certificates from local authorities * Death claims will not be considered till the courts decree otherwise Policy will be treated as paid up from the next premium due date 69. Which one of the following statements is correct? In the case of a soldier, the commanders certificate is proof of death If a soldier is taken as a prisoner of war, the premiums must be continued Both the statements above are correct * Both the statements above are wrong 70. In the case of a life insured who is a defence personnel and is missing in action Presumption of death is automatic Presumption of death depends on the certificate of the military unit * Presumption of death depends on the court orders Presumption of death will have to wait for seven years 71. Which one of the following statements is correct? A presumption of death is not the same as proof of death Presumption of death allows inheritance of property Both the statements above are correct * Both the statements above are wrong 72. If the heirs allege that the insured person is insane, the insurer should Exercise caution in settling the claim * Ignore the allegation and pay the maturity claim Refuse to pay the maturity claim Tell the heirs to prove their allegation 73. If the heirs allege that the insured person is mentally deranged, the insurer should Ask the heirs to produce a stay order from the court * Ignore the allegation and pay the maturity claim Apply to the court for appropriate directions Ask the insured person for his observations

74. Which one of the following statements is correct? The foreign exchange regulations apply if the life insured is a non-resident The foreign exchange regulations apply if the claimant is a non-resident Both the statements above are correct * Both the statements above are wrong 75. Which one of the following statements is correct? The insurer should ignore a court attaching the moneys under a MWP Act policy, The insurer should not become a party to a dispute between rival claimants * Both the statements above are correct Both the statements above are wrong 76. Which one of the following statements is correct? The insurer need not contest court orders relating to policy moneys The insurers should not sit on judgment between rival claims to policy moneys Both the statements above are correct * Both the statements above are wrong 77. Which one of the following statements is correct? Rival claimants to policy moneys should resolve the dispute themselves * The insurer need not examine the validity of rival claims to policy moneys Both the statements above are correct Both the statements above are wrong 78. Which one of the following statements is correct? If a death claim is made after a long time, it may not be genuine If a death claim is made after a long time, it must be carefully scrutinised Both the statements above are correct * Both the statements above are wrong 79. If a claim is made in January 2007 under a policy, which commenced in May 2002, stating that the life insured had died in April 2004, Section 45 of the Act will not apply The claim can be treated as an early claim Foul play must be suspected All the three statements above are correct * 80. If a claim is made in August 2007 under a policy, which commenced in May 2003, stating that the life insured had died in June 2004, The policy cannot be called into question because of section 45 of the Act The claim cannot be treated as an early claim The scrutiny and requirements should be stricter than usual *

Many requirements will have to be ignored because of difficulty in getting them

81. Which one of the following statements is correct? Accident and disability benefits are payable along with maturity claims Accident and disability benefits are payable along with death claims only Both the statements above are correct Both the statements above are wrong * 83. If a policy is kept alive by advancing premiums from surrender value, The death claim will be the full SA less premiums advanced with interest * The death claim will be the full SA without any deduction The death claim will be the full SA less premiums till the current policy year All the three above are wrong 84. When an investigation is being made in respect of early claims, It should be completed within 45 days It should be completed within 60 days It should be completed within 6 months * There is no time limit for its completion 85. If payment of death claim is delayed, insurers have to pay interest at the rate of 2% Bank rate Call money rate Bank rate plus 2 % *

Work book
1..A money back policy for SA. of Rs.50,000/-. Matured after 25 years. Survival benefits of 15% each had been paid at the end of 5th, 10th , 15th and 20th years. Bonus had accrued at Rs.965/- per Rs.1000/- SA . Interim bonus @ Rs.25/- per thousand SA is payable. What is the maturity claim amount? (a) 68250 (b) 69500 * (c) 98250 (d) 99500 2. Calculate death claim amount on the basis of data given below if life assured dies in the 25th year of the policy. Money back policy SA Rs. 50000 Term 25 years Survival benefits of 15% each paid at the end of 5th, 10th, 15th and 20th years. Accrued bonus Rs 965 per thousand SA Interim bonus Rs 25 per thousand SA (a) 68250 (b) 69500 (c) 98250 (d) 99500 * 3. The life assured under an endowment without profits policy for 20 years for Rs.1,00,000/- SA with DAB rider died on 30th June 2007 committing suicide. The policy was taken on 21st March, 2007 and was backdated to 1st April, 2006 Determine the amount of claim payable (a) nothing * (b) 1 lakh (c) 2 lakhs (d) return of premium

4. The life assured under an endowment without profits policy for 20 years for Rs.1,00,000/- SA with DAB rider died on 25th March 2008 committing suicide. The policy was taken on 21st March, 2007 and was backdated to 1st April, 2006 Determine the amount of claim payable (a) nothing (b) 100,000 * (c) 200,000 (d) return of premium 5. On the basis of the data given below, calculate the claim amount payable Date of commencement 16.06.2002, SA Rs.50000/- with DAB. Endowment 20 years. Annual premium Rs.3000 Last premium paid, due 16.06.2006. Date of death 08.07.2007 due to road accident. (a) 10000 (b) 20000 (c) 97000 * (b) 100000 6. . Given the following data, state which of the following is the correct amount of the claim payable under the policy.

Plan and term Endowment 38 years Sum Assured Rs. 50000 Date of commencement 20.5.1989 Date of death of life assured 18.8.2002 Quarterly premium Rs. 320 due in August 2002 paid on 6th August 2002 Bonus vested Rs. 36000. Interim bonus declared after valuation on 31.3.2001. Rs. 68 per thousand Rs. 85360 Rs. 88760 Rs. 86320 Rs. 89720

7. Given the following data, state which of the following is the correct amount of the claim payable under the policy. Plan and term Endowment 25 years Sum assured Rs. 40000 Date of commencement 20.7.1989 Date of death of life assured 18.2.2002 Quarterly premium Rs. 320 due in January 2002 not paid Bonus vested Rs. 30000. Interim bonus declared after valuation on 31.3.2001. Rs. 70 per thousand Rs. 50000 Rs. 52800 Rs. 69360 Rs. 71160

8. Given the following data, state which of the following is the correct amount of the claim payable under the policy. Plan and term Endowment 40 years Sum assured Rs. 50000 Date of commencement 20.2.1989 Date of death of life assured 18.2.2002 Quarterly premium Rs. 300 due in February 2002 paid on 6th February 2002 Bonus vested Rs. 36000. Interim bonus declared after valuation on 31.3.2001. Rs. 68 per thousand Rs. 86000 Rs. 89400 Rs. 86300

Rs. 89700

CHAPTER 9 LINKED LIFE INSURANCE PRODUCTS

TEST QUESTIONS

1. State which of the following statements is correct ULIPs provide for flexibility * ULIPs are better than traditional policies Both the above statements are correct Both the above statements are wrong 2. State which of the following statements is correct In ULIPs, the premium payable is based on the insurers table of rates In ULIPs, NAVs are decided by the insurers themselves Both the above statements are correct Both the above statements are wrong * 3. State which of the following statements is correct In ULIPs, the premium payable must be the same every year In ULIPs the death benefit is a guaranteed figure Both the above statements are correct Both the above statements are wrong * 4. State which of the following statements is correct In ULIPs the entire premium paid is invested in the chosen fund. The entire premium less cost of insurance is invested in the chosen fund Both the above statements are correct Both the above statements are wrong * 5. State which of the following statements is correct In ULIPs the insurance cover must be a minimum multiple of the premium * ULIPs can be surrendered after two years Both the above statements are correct Both the above statements are wrong 6 State which of the following statements is correct ULIPs cannot be issued as participating policies Loans are not given under ULIPs

Both the above statements are correct * Both the above statements are wrong

7. State which of the following statements is correct In ULIPs the premium is invested in a fund decided by the insurer In ULIPs the premium is invested in a fund decided by the policyholder * Both the above statements are correct Both the above statements are wrong 8. State which of the following statements is correct The NAVs of the growth funds of all insurers will be the same The NAVs of all the funds of all the insurers will vary * Both the above statements are correct Both the above statements are wrong 9. State which of the following statements is correct In ULIPs, the premium will be invested as per the offer price * The offer price will always be higher than the bid price Both the above statements are correct Both the above statements are wrong 10. State which of the following statements is correct In ULIPs, the offer bid spread is the difference between the two prices In ULIPs, the offer bid spread, will in some cases be zero Both the above statements are correct * Both the above statements are wrong 11. State which of the following statements is correct In ULIPs, a policyholder can switch between funds at any time In ULIPs, the premium to be invested in the fund can be increased in any year Both the above statements are correct * Both the above statements are wrong 12. State which of the following statements is correct In ULIPs, a policyholder can switch between funds at any time * There is always a charge for switching between funds Both the above statements are correct Both the above statements are wrong 13 State which of the following statements is correct In ULIPs, the best benefits come from growth funds In ULIPs, the best benefits come from the balanced funds Both the above statements are correct Both the above statements are wrong *

14. State which of the following statements is correct In ULIPs, no money can be withdrawn within 5 years In ULIPs, death claims are not paid during the lock-in period Both the above statements are correct Both the above statements are wrong * 15. State which of the following statements is correct In ULIPs, the amount payable on death is a fixed amount In ULIPs, the NAV of a fund can be less than purchase price Both the above statements are correct Both the above statements are wrong

16. State which of the following statements is correct In ULIPs, the SA must not be less than 1.25 times single premium In ULIPs, the SA must not be less than 5 times instalment premium Both the above statements are correct * Both the above statements are wrong 17. State which of the following statements is correct In ULIPs the premium paid is invested in full in the funds In ULIPs, only the allocated premium is invested in the funds * Both the above statements are correct Both the above statements are wrong 18. State which of the following statements is correct In ULIPs, the insurer is responsible for the benefits under then policy In ULIPs, the policyholder is responsible for the benefits under the policy * Both the above statements are correct Both the above statements are wrong 19. State which of the following statements is correct In ULIPs, the NAVs are known only to the insurers In ULIPs, the NAVs are published regularly. * Both the above statements are correct Both the above statements are wrong 20 State which of the following statements is correct In ULIPs, one can pay additional premium in any year for investment * In ULIPs, if one increases the premium, the SA must also be increased. Both the above statements are correct Both the above statements are wrong 21 State which of the following statements is correct

In ULIPs, one can pay additional premium in any year for investment In ULIPs, the lock in period will apply, if additional premium is paid any year Both the above statements are correct * Both the above statements are wrong

22. State which of the following statements is correct In ULIPs, if the policy is terminated earlier, a charge has to be paid In ULIPs, an administrative charge has to be paid every year Both the above statements are correct Both the above statements are wrong 23 State which of the following statements is correct In ULIPs, riders can be availed of In ULIPs, the riders will be based on the basic SA and not NAVs Both the above statements are correct * Both the above statements are wrong 24. State which of the following statements is correct In ULIPs, the death benefit may be integrated In ULIPs, the death benefit will be the basic SA only Both the above statements are correct * Both the above statements are wrong 25. State which of the following statements is correct In ULIPs, loans are available In ULIPs, partial withdrawals are permitted periodically * Both the above statements are correct Both the above statements are wrong

CHAPTER 10 INSURANCE AGENCY

TEST QUESTIONS 1. Which of the following laws affect the working of an insurance agent? The Insurance Act The Contract Act The Income Tax Act All the three mentioned above * 2. A person is an insurance agent because of The nature of his duties *

His designation The training given to him All the three mentioned above

3. A person is an insurance agent because of The licence given to him His knowledge His duties * His salary 4. Which of the following statements is true? Anybody can become an insurance agent Some people will not be allowed to become insurance agents Neither of the above statements is true Both the above statements are correct 5. Which of the following statements is true? An agent must look after the interests of the insurer An agent must look after the interests of the proposer Neither of the two statements is true Both the above statements are correct * 6. Which of the following statements is true? The functions of an agent are the same, whichever insurer he is working for The functions of an agent differ according to the insurer he is working for * The commission payable to an agent is determined by the IRDA All the above statements are true 7. A licence for insurance agency will not be given unless the person Has passed an examination prescribed by the IRDA Is 21 years of age Has undergone training Satisfies all the above conditions * 8. A licence for insurance agency will not be given unless the person Is recommended by an insurer * Is a graduate Is a resident of the town where the insurer has an office Satisfies all the above conditions 9. A licence for insurance agency will be given to a person who Is recommended by an insurer * Has a masters degree Is 45 years of age

Satisfies all the above conditions

10. Licences for working as insurance agents are given to Individuals Companies Cooperative societies All the three * 11. Which of these persons will not be given a licence to work as an insurance agent? A person with a criminal record * A corporate insurance executive An employee of an insurance company All the three mentioned above 12. Which of the following statements is correct? A broker is an insurance agent A specified person is an insurance agent A corporate insurance executive can work for more than one life insurer None of the above statements are correct * 13. Which of the following statements is correct? An insurance agent has fixed working hours An insurance agent has to mark his attendance in office every day An insurance agent works according to his schedule * An insurance agent cannot do any other work 14. Which of the following statements is true? An insurance agent is a full time employee of the insurer An insurance agent is a part time employee of an insurer An insurance agent is not an employee of an insurer * An insurance agent is not allowed to have any other employment 15. Which of the following statements is true? A life insurance agent cannot represent a mutual fund A life insurance agent cannot sell small savings schemes A life insurance agent cannot be a sharebroker All the three statements are wrong * 16. Which of the following statements is true? An insurance agent is paid a salary every month Commissions will stop as soon as an agent reaches 65 years of age Commissions paid by different insurers are the same Commissions may continue to be paid to the heirs, after the death of the agent *

17. A life insurance agent should Persuade every prospect to buy a life insurance policy Advise the prospect about the best financial arrangement for his situation * Say that life insurance is better than all other avenues for investment Say that life insurance is meant for young people only 18. A life insurance agent should Be aware of the plus and minus points of all financial instruments Know the benefits of all life insurance plans Understand how the income tax laws apply to a prospect Know all the three above * 19. Which of the following statements is not correct? An agent should be able to suggest a total financial package for the prospect An agent should be an expert only with regard to life insurance * An agent should be up-to-date on the tax laws An agent should be aware of the IRDA regulations 20. Which of the following statements is not correct? A life insurance agent should carry the literature with him A life insurance agent should carry his licence with him always A life insurance agent should not appear shabby All the above statements are correct * 21. Which of the following statements is not correct? Life insurance does not meet the needs of all people always Life insurance is not better than all other investments Tax advantage is not the best reason for buying life insurance All the above statements are correct *

22. If a person does not have an insurance agents licence, he cannot Procure or solicit insurance business Work for an insurance company Be paid commission on the premium under policies procured by him * Advise persons on the best plans of insurance 23. When is the job of a life insurance agent over? As soon as the policy is issued When the claim arises under the policy When the claim is paid under the policy It is not over as long as the policyholder or any member of his family is alive * 24. When a policy lapses, it can be inferred that The agent has not been in touch with the policyholder The agent had not explained the benefits of insurance properly The agent had failed in his duties All of the above * 25. A good life insurance agent must have Knowledge of the benefits under the various plans of insurance Knowledge of the other schemes where the prospect can put his moneys Knowledge of the office procedures All of the above * 26. Knowledge of a plan of insurance includes Details about the benefits available under that plan Availability of similar plans from competitors Implications of the relevant tax laws All of the above * 27. State which one of the following statements is correct Life insurance is the best savings scheme for all persons Life insurance is the best investment scheme for young persons Both the statements above are correct Both the statements above are wrong * 28. State which one of the following statements is correct Some people have no need for life insurance Some people buy life insurance only for tax benefits Both the statements above are correct * Both the statements above are wrong 29. State which one of the following statements is correct

An agents job is to sell life insurance to every person An agents job is to assist in claim settlement * Both the statements above are correct Both the statements above are wrong

30. State which one of the following statements is correct An agent has to ensure that nominations are changed whenever necessary An agent is the agent of the proposer / policyholder Both the statements above are correct * Both the statements above are wrong 31. State which one of the following statements is correct There are plenty of instruments available for savings and investments * The best insurance policy is the one with the lowest premium rates Both the statements above are correct Both the statements above are wrong 32. State which one of the following statements is correct An agent should not admit that he does not have a particular information An agent cannot know everything that the proposer wants to know * Both the statements above are correct Both the statements above are wrong 34. State which one of the following statements is correct Ethical behaviour leads to improved business and earnings Ethical behaviour is automatic when the policyholders interest are kept in mind Both the statements above are correct * Both the statements above are wrong 35. State which one of the following statements is correct Ethical behaviour is prescribed in the IRDAs code of conduct Ethical behaviour is automatic when the policyholders interest are kept in mind Both the statements above are correct * Both the statements above are wrong 36. State which one of the following statements is correct Running down other insurance companies is not wrong The agent has to ensure that no extra is charged by the underwriter Both the statements above are correct Both the statements above are wrong * 37. State which one of the following statements is correct The agent is responsible if there has been suppression of material facts in a case Unethical behaviour affects the reputation of the agent and the insurer

Both the statements above are correct Both the statements above are wrong

38. State which one of the following statements is correct Unethical behaviour can affect the settlement of the claim, if it is early Ethical behaviour is beneficial to the policyholder, but not to the agent Both the statements above are correct Both the statements above are wrong 39. State which one of the following statements is correct When vital information is not disclosed, the policyholder is benefited When a claim is repudiated, the agents trustworthiness is affected * Both the statements above are correct Both the statements above are wrong

40. State which one of the following statements is correct Ethics is compromised when the agent considers his earnings as important The agent must give to the insurer all information he has about the life to be insured Both the statements above are correct * Both the statements above are wrong 41. It is wrong to terminate an existing policy and take out a fresh one if The benefits under the new one are drastically different from the existing one The earlier policy was taken without fully understanding the implications of the MWP Act The agent who had recommended the earlier policy is not active any more It is done with a view to collect the higher first years commission *

CHAPTER 11
TEST QUESTIONS

LAW AND REGULATIONS

1. State which one of the following statements is correct? Every insurer in India has to comply with the Insurance Act * Every insurer has to comply with the provisions of the IRDA Act Both the statements above are correct Both the statements above are wrong 2. The Insurance Act deals with Registration of insurers Investments of insurance funds Licensing of agents All of the above *

3. The Insurance Association is A trade union of insurance employees A voluntary association of insurers to negotiate with the IRDA A body constituted by the IRDA Act None of the above * 4. The Insurance Association Conducts examination for agents Is constituted by the IRDA act Is constituted by the Insurance Act Is none of the above

5. State which one of the following statements is correct? It is an offence if an agent gives a rebate It is an offence if an insurer gives a rebate Both the statements above are correct * Both the statements above are wrong 6. Which of the following can a policyholder having a dispute with an insurer, approach? IRDA Ombudsman Consumers redressal forum Any of the above * 7. State which one of the following statements is correct? The Ombudsman is the final authority involving insurers The insurer is at liberty to reject the decisions of the Ombudsman Both the statements above are correct Both the statements above are wrong * 8. State which one of the following statements is correct? The Ombudsmans authority is limited to claims matters only The Ombudsman is not a judicial authority * Both the statements above are correct Both the statements above are wrong 9. State which one of the following statements is correct? The Ombudsman sits like a court with witnesses and lawyers The Ombudsman will not hear matters already before other courts * Both the statements above are correct Both the statements above are wrong

10. State which one of the following statements is correct? The Ombudsmans recommendations are not binding on the complainant Insurers have to comply, if the complainant accepts what the Ombudsman says Both the statements above are correct * Both the statements above are wrong 11 State which one of the following statements is correct? The Ombudsmans award is binding on all parties The Ombudsman is appointed by the Chief Justice Both the statements above are correct Both the statements above are wrong * 12. State which one of the following statements is correct? Matters referred to the Ombudsman may not be decided for years The Ombudsman cannot modify the terms of acceptance of the proposal * Both the statements above are correct Both the statements above are wrong 13. Which of the following matters can be referred to the Ombudsman? A complaint that the extra charged is not reasonable Grievance against the decision of a consumer forum Dispute on the amount offered by the insurer to settle a claim * All of the above 14. Which of the following matters can be referred to the Ombudsman? Dispute on whether a premium had been paid in time or not Dispute on whether the policy should be treated lapsed or not Complaint that the enquiries being made are unjustified and delaying the claim All of the above * 15. Which of the following complaints would be heard by the Ombudsman? That the insurer is delaying the claim on the grounds of investigation That the premium was paid on time but accounted by the insurer late That the policy should not be treated as lapsed All of the above * 16. State which one of the following statements is correct? Life insurance policies provide savings in taxes * The income tax relief will be the same throughout the policy term Both the statements above are correct Both the statements above are wrong 17. State which one of the following statements is correct? The surrender value is not treated as income

The claim amount is not treated as income Both the statements above are correct * Both the statements above are wrong

18. State which one of the following statements is correct? Tax benefits are part of policy conditions. Tax benefits available in the first year of the policy, do not change thereafter Both the statements above are correct Both the statements above are wrong * 19. State which one of the following statements is correct? Tax benefits can be promised while selling the policy The tax benefits may be changed at any time through legislation Both the statements above are correct Both the statements above are wrong 20 State which one of the following statements is correct? A consumers forum is set up exclusively for insurance matters There is no appeal against the decision of the consumer forum Both the statements above are correct Both the statements above are wrong * 21. State which one of the following statements is correct? The consumer forum can summon witnesses * The Ombudsman can summon witnesses Both the statements above are correct Both the statements above are wrong 22. State which one of the following statements is correct? The Income tax privileges for insurance are not guaranteed Income tax provisions on rebate can change any time Both the statements above are correct * Both the statements above are wrong 23 State which one of the following statements is correct? The tax provisions are the same for all kinds of savings The tax provisions are included in the Constitution Both the statements above are correct Both the statements above are wrong * 24. State which one of the following statements is correct? Every agent has to do some business in the rural areas A rural area is defined in the Insurance Act Both the statements above are correct

Both the statements above are wrong

25. State which one of the following statements is correct? A rural area is defined in the IRDA Act A rural area is an area outside municipal limits Both the statements above are correct Both the statements above are wrong * 26. State which one of the following statements is correct? A rural area is defined in the Constitution of India Business in the rural areas can be done only by rural agents Both the statements above are correct Both the statements above are wrong * 27. State which one of the following statements is correct? A rural area is defined in the IRDA Act A rural area is defined in the IRDA Regulations * Both the statements above are correct Both the statements above are wrong 28. State which one of the following statements is correct? Agents are appointed separately to work in the rural sector Any agent can do business from the rural areas * Both the statements above are correct Both the statements above are wrong 29. State which one of the following statements is correct? The Insurance Act has stipulated that insurers must do minimum business in the rural areas The IRDA has stipulated the minimum business that is to be done in rural areas Both the statements above are correct * Both the statements above are wrong 30. State which one of the following statements is correct? The requirement of business from the rural areas increases every year The minimum requirement is in terms of number of policies Both the statements above are correct * Both the statements above are wrong 31. State which one of the following statements is correct? Every insurer has to do a minimum SA of business from the rural areas Every insurer has to do a minimum number of policies from the rural areas * Both the statements above are correct Both the statements above are wrong

32. State which one of the following statements is correct? The social sector is the same as the rural sector The social sector is an organised sector Both the statements above are correct Both the statements above are wrong * 33. State which one of the following statements is correct? The social sector consists of social workers The social sector includes backward classes * Both the statements above are correct Both the statements above are wrong 34. State which one of the following statements is correct? The social sector is only in the rural areas The social sector is only in the urban areas Both the statements above are correct Both the statements above are wrong * 35. State which one of the following statements is correct? The social sector is not only in the urban areas The social sector includes the unorganized sector Both the statements above are correct * Both the statements above are wrong 36. State which one of the following statements is correct? Micro insurance is meant for the rural sector only Micro insurance can be sold only by specially appointed agents Both the statements above are correct Both the statements above are wrong * 37. State which one of the following statements is correct? Life insurance agents can sell non-life micro insurance products Life micro insurance policy cannot exceed Rs. 50000 SA Both the statements above are correct * Both the statements above are wrong 38 State which one of the following statements is correct? A family with 6 children can be given a micro insurance policy Health insurance covers can be provided under micro insurance * Both the statements above are correct Both the statements above are wrong

39. State which one of the following statements is correct? Special agents are appointed to sell micro insurance Commission for selling micro insurance is less than ordinary insurance Both the statements above are correct * Both the statements above are wrong 40. State which one of the following statements is correct? The term for life micro insurance policies is limited A person aged 45 can be given a life micro insurance policy Both the statements above are correct * Both the statements above are wrong