Insurance — Part 2 MCQs with Explanations

Policy is the written insurance contract that may include all clauses, riders and endorsements.

Agriculture Insurance Company Of India Limited (AIC) was incorporated to exclusively cater to the insurance needs of the persons engaged in agriculture and allied activities in India under-Companies Act, 1956.

Broker is the person who represents the interests of the insured in searching for insurance coverage at the lowest cost and highest benefit to the insured.

The Universal Health Insurance Scheme (UHIS) launched by the Government of India w.e.f. 14.7.2003 is already in existence for persons and families below the poverty line with element of subsidy from the Government.

Agriculture Insurance Company of India Limited was incorporated under the Indian Companies Act 1956 on 20th December, 2002 with an authorised share capital of INR 15 billion and paid up capital of INR 2 billion. AIC commenced business from 1st April, 2003.

Nippon Life Insurance has signed definitive agreements to invest Rs 2,265 crore (US$ 332.32 million in order to increase its stake in Reliance Life Insurance from 26 per cent to 49 per cent. Nippon Life Insurance based in- Japan.

Insurance Regulatory and Development Authority of India (IRDAI) has not contributed towards the share capital of Agriculture Insurance Company of India Limited (AIC).

Insurance begin in Babylon in 1750 BC. Babylonians also practiced insurance in the form of a system, called the Code of Hammurabi, c. 1750 BC. It was practiced by the early Mediterranean sailing merchants. When a merchant takes a loan to fund his shipment, he would also pay an extra sum to the lender to would guarantee him to cancel the loan when the shipment is stolen or lost at sea.

Whole life, Endowment, Term, Investment-linked, Life annuity plan, Medical and health are the main products of life insurance. Motor insurance, Fire/House owners/Householders insurance, Personal accident insurance, Medical and health insurance, Travel insurance are the main products of general insurance.

New India Assurance Company Limited, National Insurance Company Limited, The Oriental Insurance Company, United India Insurance, Agricultural Insurance Company of India are the major general insurance companies in India. Bajaj Allianz General Insurance, ICICI Lombard General Insurance, IFFCO-Tokio General Insurance, Reliance General Insurance, Royal Sundaram Alliance Insurance, TATA AIG General Insurance, Cholamandalam General Insurance, HDFC Ergo are the major general insurance private sector companies in India.

In a life insurance contract, the stated sum of money to be paid to the beneficiary upon the insured’s death is termed as Face Amount. Also called the Coverage Amount, Face Amount or Sum Insured. A contract that pays a fixed sum of money at regular intervals, usually for life. A contract that pays an income for a set number of years, and will pay the annuitant's beneficiary or estate if the annuitant dies before the end of the payment term.

A single policy covering a group of individuals, usually employees of the same company or members of the same association and their dependants is called Group Insurance. A group insurance policy gives you advantages of standardised coverage and very competitive premium rates.

A seller’s market in which insurance is expensive and in short supply is termed as Alternative Market. A term commonly used in risk financing to refer to one of a number of risk funding techniques is known as Alternative Market.

An environment where insurance is plentiful and sold at a lower cost, also known as a Buyers market is called Soft Market.

The concept of insurance involves a transfer of Risk. A transfer of risk, considered the underlying tenet of insurance transactions, is a risk management technique where risk shifts from one party to another.

Rakesh recently bought a health insurance policy and a personal accident policy. The insurance market fall in Non-life insurance in both cases.

The main role of an underwriter in a non-life insurance company is normally to design the structure of the products to be offered.

Akshat is a relatively cautious person. In insurance terms, this will normally increase the likelihood that he will Require insurance cover. Insurance coverage is the amount of risk or liability that is covered for an individual or entity by way of insurance services.

Perils are risks that policyholders will die before a specified date and hazards are factors which could influence that risk. Perils are factors which affect the risk being insured and hazards are the size of the risk being insured.

Financial loss would be severe even though chance of loss is small and situation of low probability but high severity is where insurance works as efficiently and effectively.

For a household insurance policy, insurable interest need only exist at outset and the date a claim occurs.

Rahul is employed by Sunny. In respect of this employment, Rahul automatically has an insurable interest in Sunny’s life up to Rahul's monthly salary.

Arun started a 20-year term insurance policy. Once established, the insurer is next entitled to ask him for proof of continuing good health when a lapsed policy is revived.

The concept of indemnity is based on the key principle that policyholders should be prevented from profiting from insurance. One of the basic tenets of insurance, that the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damage occurred.

Once an absolute assignment is effected under a life insurance policy, The assignee in all cases will be the titleholder(s) of this policy. Transfer by the holder of a life insurance policy (the assignor) of the benefits or proceeds of the policy to a lender (the assignee), as a collateral for a loan.

A life insurer issued a quotation on 10 February, guaranteed for 14 days, which was accepted by the customer on day 10. Consequently the insurer can only decline this risk if the Material facts change.

A policy document for a money-back policy includes the statement of the proposal and declaration signed by the proposer form the basis of the contract's. In Preamble section of the policy document will this normally appear.

A life insurance policy can only be made paid up if Savings element policy feature exists.

The main reason why a life insurance proposal form often asks for the proposer's height is to enable a reasonable comparison with the proposer’s Weight.

Where annually increasing flexible premiums operate under a life insurance policy, 5.00% of increase will generally apply.

The amount paid out by the insurer under a 30-year life insurance policy exceeded the sum insured plus revisionary bonuses. The excess is likely to result a terminal bonus. Terminal Bonus is also known as persistency bonus which is paid once, i.e. at the time of maturity of the policy. It is a sort of loyalty bonus given to a policyholder for maintaining the policy till maturity. Its value is not guaranteed and will be disclosed only at the time of policy maturity.

The sum insured under a life insurance policy once the period of the lien expires it increases.

The main protection need of a 19-year-old is most likely to be Self-protection.

Raunak recently arranged a life insurance policy under which he is classed as the master policyholder. This addresses his role as an employer.

The need for investment advice from an insurance agent normally results from lack of market knowledge.

When undertaking financial planning for individuals without capital, Emergency funds savings need is likely to be addressed in every single case. An emergency fund is money that you have set aside to specifically cover any unexpected expenses that may come up.

Naveen is addressing his income needs by investing directly in corporate bonds. By Interest payments for he will receive this income.

Named Perils is a property insurance term referring to policies that provide coverage only for the loss caused by the perils specifically listed as covered.

A coverage that protects businesses engaged in electronic commerce from losses caused by hackers is termed as Hacker Insurance.

Coverage against loss through stealing by individuals not in a position of trust is called Theft Insurance. Theft-insurance contracts cover losses from burglary, robbery, and other theft.