Dear Aspirants, LIC AAO is one the most important exam in the competitive examination. LIC AAO mains exam consists of four sections i.e. Reasoning ability, Data Analysis & Interpretation, General knowledge & Current affairs and Insurance & Financial Market Awareness. Insurance & Financial Market Awareness section comprises of 30 questions. Insurance & Financial Market Awareness questions plays an important role in boosting up the score in mains examination and also helps in interview. Here we are providing new series of Practice Questions on Insurance awareness. Aspirants can make use of it, to improve score in Insurance & Financial Market Awareness section.[WpProQuiz 5502]
1) What does “Reinsurance” mean?
a) Taking insurance by person from multiple insurance companies
b) Double insurance taken by a entity or person
c) Insurance for insurance companies
d) Term insurance taken by a person
e) Life time insurance taken by a person
2) Which term is used for options given to policyholders of ULIPs to move their investments from one fund to another within one plan?
a) Transfer Pricings
b) Trade Options
d) Unit Payments
e) Dual Payments
3) What do you understand by term ‘Premium Allocation Charge’s’ used in insurance sector?
a) Third-party insurance charge
b) Charge levied by insurance firms to recover the initial expense
c) CESS levied by union government
d) Commission charged by the Policy agent
e) Surcharge appropriated by union government
4) Which life insurance company has unveiled an Artificial Intelligence (AI) –powered customer service app “Khushi”?
a) ICICI Prudential Life Insurance
b) SBI Life Insurance Company
c) HDFC Life Insurance Company
d) PNB Metlife India Insurance Company
e) Aegon Life Insurance Company
5) Which of the following is India’s oldest existing insurance company?
a) Life Insurance Corporation of India
b) New India Assurance Company Ltd.
c) United India Insurance Company Ltd.
d) National Insurance Company Ltd.
e) General Insurance Company Ltd.
6) _______ is a policy contract that for some reason specified in the policy becomes free of all legal effect.
c) Retrospective Rating
e) None of these
7) What do you understand by term “Life Assured” used extensively in insurance sector?
a) The payment to the policy holder at the end of the stipulated term of the policy
b) The person whose life is insured by an individual life policy
c) The scope of protection provided under a contract of insurance
d) These are policies where the payment stays fixed
e) All of the above
8) What does ‘Co-insurance’ term mean in Health insurance?
a) Taking two insurance policies simultaneously
b) Taking Joint insurance
c) Percentage premium of Health and Vehicle insurance
d) Taking Property and Term Insurance
e) Percentage of Health expenditure paid by policyholder
9) What is maximum FDI limit in insurance sector at present?
10) What do you mean by term “Underwriting’’ used in insurance sector?
a) Licensing to insurance firms
b) Writing the contract between insurer and re-insurer
c) Process of assessing risks for insurance
d) Assessing annual average cost of premium
e) Assessing the total benefits post maturity of policy
1) Answer: c)
Reinsurance is insurance that is purchased by an insurance company. The purpose of reinsurance is for a company to avoid having too large a risk or concentration of risks, within the company.
2) Answer: c)
Switches are options given to policyholders of ULIPs to move their investments from one fund to another, within one plan. You can transfer units fully or partially between fund options — equity, debt and equity to debt.
3) Answer: b)
Every time you take up a insurance plan, the insurance company spends some amount of money on distributor fee, underwriting expenses of the policy as well as medical expenses. Premium allocation charges are levied as a certain percentage of the premium to offset for all such expenses. Premium allocation charges are deducted upfront and the remaining money gets invested in the chosen fund.
4) Answer: d)
Life insurer company ‘PNB Metlife India Insurance Company’ has unveiled an Artificial Intelligence (AI)-powered customer service app ‘Khushi’. The app is designed to be a one-stop shop providing insurance-related information, anytime, anywhere, such as policy features, premium due details besides providing fund value and portfolio details. It has been designed by PNB Metlife’s innovation centre of Singapore.
5) Answer: d)
National Insurance Company Limited (NICL) was founded in 1906 and headquartered at Kolkata. It is oldest existing insurance company in India.
6) Answer: d)
A policy or other contract that has no legal validity is described as void. When an insurance company voids a life insurance policy, it is usually due to the discovery of misrepresentation of material facts by the person insured. It is as though the voided policy was never in effect since all premiums paid are usually returned to the policy owner.
7) Answer: b)
The person whose life is insured by an individual life policy is called life assured.
8) Answer: e)
Coinsurance is a form of cost sharing for health services between insurance companies and the insured.
9) Answer: b)
The FDI (Foreign Direct Investment) policy, at present, allows 49 per cent foreign investment in the insurance sector, which includes insurance intermediaries.
10) Answer: c)
Underwriting is the process of assessing proposals/risks for insurance. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk.