LIC AAO 2019 – Insurance Awareness Questions (Day – 14)

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.

LIC AAO Insurance Awareness Questions Day -14

maximum of 10 points
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1) Which among the following principle states about the Individual who should be benefitted from the insured item?

a) Principle of subrogation

b) Principle of loss minimization

c) Principle of Insurable Interest

d) Principle of Contribution

e) None

2) Which Insurance Policy gives holder the benefits of both insurance and Investment?

a) Term Insurance Policies

b) Money-back policies

c) Unit-linked Investment Policies

d) Pension Policies

e) None of the above

3) Reinsurance is the name given to?

a) An individual taking insurance for the second time

b) An insurer placing insurance with another insurer

c) When government by insurance policies for government employees

d) All the above

e) None of these

4)  Which was the oldest insurance company founded in 1906?

a) LIC

b) National Insurance Company

c) Agriculture Insurance Company of India

d) United India Insurance Comp

e) None of these

5) Which of the following terms is not related to the insurance sector?

a) Indemnity

b) Coverage

c) Misuse Alert

d) Annuity

e) None of these

6) Under which section of insurance regulatory act 1938, the merger of an insurance company and a financial entity is not allowed?

a) Section 35

b) Section 21

c) Section 8

d) Section 91

e) Section 24

7) In Insurance sector the word “TPA” stands for?

a) Target People Assistance

b) Third Party Administrator

c) Target People Administrator

d) Additional Time Premium

e) None of the above

8) When the bank sells insurance products, such arrangement is called as ?

a) Insurance joint venture

b) Bancassurance model

c) Hybrid Insurance Model

d) Insurance Broking

e) Integrated Model

9) Funds that a lender collects to receive monthly premiums in mortgage as well for paying home owners insurance, and sometimes to pay property taxes is called _______

a) Affinity sales

b) Demutualization

c) Escrow Account

d) Earned Premium

e) Demat account

10) Which of the following scenario defines a situation whereby an insurance company moves ahead to sue the third party who caused insurance loss to insured?

a) Subrogation

b) Indemnity

c) Risk recovery

d) Sum coverage

e) None of the above

Answers :

1) Answer: c)

The principle of insurable interest states that the person getting insured must have insurable interest in the object of insurance. A person has an insurable interest when the physical existence of the insured object gives him some gain but its non-existence will give him a loss. In simple words, the insured person must suffer some financial loss by the damage of the insured object.

2) Answer: c)

In unit-linked plans, the premiums paid are invested in funds offered by the company, and the policyholder determines the appropriate ratio of investments into these funds. The funds are generally invested in equities, debt instruments, money market instruments, and government securities. The value of the policies is determined on any day by multiplying the number of units issued by the value of units on that day. The value of these units is called the Net Asset Value (or NAV) and is based on the market value of the underlying investments.

3) Answer: b)

Reinsurance is insurance that is purchased by an insurance company from one or more insurance companies (the “reinsurer”) directly or through a broker as a means of risk management.

4) Answer: b)

The oldest existing insurance company in India is the National Insurance Company (NICL), which was founded in 1906, and is still in business. The company headquartered at Kolkata was nationalized in 1972. The Government of India issued an Ordinance on 19 January 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year.

5) Answer: c)

Indemnity- security or protection against a loss or other financial burden. Annuity- a fixed sum of money paid to someone each year Coverage-the amount of protection given by an insurance policy.

6) Answer: a)

Section 35 of the Insurance Act, 1938 does not allow a merger of an insurance firm with a non-insurance firm.

7) Answer: b)

A third-party administrator (TPA) is an organization that processes insurance claims or certain aspects of employee benefit plans for a separate entity.

8) Answer: b)

The bank insurance model (BIM), also sometimes known as bancassurance or allfinanz, is the partnership or relationship between a bank and an insurance company, or a single integrated organisation, whereby the insurance company uses the bank sales channel in order to sell insurance products. Thus banks acting as the agent of the respective companies

9) Answer: c)

It’s the Escrow account, which is more specifically used in real estate’s, where the buyer pays the building price to the owner and also along with that pay their insurance and taxes accruing out of the house bought.

10) Answer: a)

It’s the principle of subrogation which stands for a legal right reserved by most insurance carriers. It is the right for an insurer to legally pursue a third party that caused an insurance loss to the insured. By doing this companies recovers the amount of the claim paid by them to the insured for the loss.

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