LIC AAO 2019 – Insurance Awareness Questions (Day – 02)

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 5517]

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1) Consider the following statements regarding the Group Insurance Policy.

  1. It can be group term insurance policy and group health insurance policy.
  2. The premium is lesser than the premium in case of individual policies taken.
  3. This is taken by companies for their employees as part of the employee benefits.

Which among the above statements is/are true?

a) Both I and II

b) Both II and III

c) Both I and III

d) Only II

e) All I, II and III

2) Which among the following is an insurance contract in which there is only maturity benefit and no death benefit?

a) Pure Endowment Policy

b) Pure Term Policy

c) Whole Life Insurance Policy

d) Mixed Term Plan

e) None of the above

3) Which basic principle of insurance defines that insurance company is liable to compensate the insured up to the actual loss amount suffered?

a) Principle of Indemnity

b) Principle of Contribution

c) Principle of Subrogation

d) Principle of Utmost Good Faith

e) None of the above

4) The charges towards providing the death cover under an ULIP Policy are known as ________.

a) Mortality charges

b) Premium Mortality Charges

c) Fund Management Fee

d) Surrender Charges

e) Fund Switching Fees

5) Which among the following correctly defines the Principle of Insurable Interest in an insurance contract?

a) It defines that the insurance company should know the extent loss that may occur in case of any event.

b) It defines that the insured should understand the contract of insurance properly before signing the papers.

c) A person is said to have insurable interest in something when loss or damage to that thing would cause loss to the person.

d) It defines that the insurance company and the insured should have a good working relationship during the tenure of the policy.

e) It defines that any insurance company has interest in providing insurance cover but the insured should take an informed decision only in this regard.

6) What do you understand by term ‘Venture Capital’?

a) A short-term capital provided to industries

b) A long-term start-up capital provided to new entrepreneurs

c) Funds provided to industries at times of incurring losses

d) Funds provided for replacement and renovation of industries

e) None of these

7) Which is a fixed amount for a covered service in health sector?

a) Coinsurance

b) Deductible

c) Copay

d) Health Insurance

e) None of these

8) The amount of risk retained by an insurance company that is not re-insured is called

a) Reinsure

b) Uninsurable risk

c) Insurable risk

d) Retention

e) None of these

9) Mortality Charge is the amount charged _____________ by the insurer

a) Every 3 months

b) Every year

c) Every 18 months

d) Every 6 months

e) None of these

10) An insurance cover that is linked with credit activities and aims to protect the credit is called ______

a) Claims

b) Retrocession

c) Retrospective Rating

d) Credit life

e) None of these

Answers :

1) Answer: e)

Group Insurance Policies can be group term insurance and group health insurance policy. The premium costs less than the premium in case the individual policyholders had taken separate policies. This is because the risk is spread over a large group of persons, rather than one person.

2) Answer: a)

Pure Endowment Plan is such that it only gives maturity benefit i.e. the sum assured becomes payable on maturity of the policy. The claim amount is payable if death occurs within the policy term or if the insured survives the total term of the policy, whichever takes place earlier.

3) Answer: a)

The Principle of Indemnity defines that the insurance contract will put the insured at the same position as before the loss. This is applicable to all the general insurance contracts but in case of life insurance, it is not applicable. This simply defines that the insured is entitled to get the compensation up to the actual amount of loss suffered by the insured.

4) Answer: a)

In an ULIP Policy, the cost of insurance coverage towards death benefit is known as the mortality charges in the policy. Fund Management Fees in ULIP Policy are levied towards the fees for the management of units allocated under various mutual funds. Surrender Charges under ULIP Policy are levied in case the policy surrendered before the date of maturity. Fund switching charges in an ULIP Policy are collected in case the insured wants to switch the funds towards which the investments are being made under the policy.

5) Answer: c)

The Principle of Insurable Interest is applicable to all the contracts of insurance. It defines that the insured will have insurable interest in something if he suffers loss due to any damage to that thing.

6) Answer: b)

Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

7) Answer: c)

A copayment or copay is a fixed amount for a covered service, paid by a patient to the insurance company before patient receives service from physician

8) Answer: d)

Retention is the amount of risk retained by an insurance company that is not re-insured.

9) Answer: b)

Mortality Charge is the amount charged every year by the insurer to provide the life cover to the policyholder on the life of the Life Insured. It can otherwise be called the Cost of Insurance.

10) Answer: d)

Insurance that covers such a loan is known as credit life/credit disability.

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