LIC AAO 2019 – Insurance Awareness Questions (Day – 27)

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.

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1) The minimum and maximum period for the maturity of Certificate of Deposit (CDs) is?

a) 30 days and 1 year

b) 30 days and 3 years

c) 90 days and maximum period limit.

d) 7 days and 2 years

e) 7 days and 1 year

2) The principle according to which the insured person is repaid only that amount of money, which he/she has actually suffered loss, is known as ________

a) Principle of indemnity

b) Law of proximity

c) Principle of universality

d) Principle of contribution

e) None of the above

3) What does BBB stands for?

a) Banker’s Blanket Bond

b) Business Before Board

c) Banker’s Bankruptcy Board

d) Business Bankruptcy Board

e) None of the above

4) The term ‘insurable interest’ is related to which of the following types of insurance?

a) Life Insurance

b) Fire Insurance

c) Marine Insurance

d) General Insurance

e) All of the above

5) Which of the following is an exception to the ‘Principle of indemnity’?

a) Life Insurance

b) Marine Insurance

c) Fire Insurance

d) Crop Insurance

e) None of the above

6) What does the principle of loss minimisation means?

a) The least possible loss will be repaid by insurance company.

b) It is the duty of the insurer to keep a check on insured property for minimum loss.

c) It is the duty of insured to take reasonable care to minimise the loss.

d) A and C both are true

e) All are true

7) IRDAI has asked insurers to enhance capital sum insured in compulsory personal accident cover for owner-driver under motor insurance policies to Rs 15 lakh. The premiums for Rs 15-lakh cover have been fixed at Rs ____ per annum.

a) 500

b) 700

c) 750

d) 900

e) 1000

8) The principle according to which the insured person is repaid only that amount of money, which he/she has actually suffered loss, is known as ________

a) Principle of indemnity

b) Law of proximity

c) Principle of universality

d) Principle of contribution

e) None of the above

9) What is Micro Insurance Plan?

a) Insurance given to small group of people.

b) Insurance given to villagers.

c) Insurance given to low income households

d) Insurance given to single entity

e) All of the above

10) What does ‘N’ stands in ‘NSFR’ guidelines issued by RBI ?

a) National

b) Nominal

c) Non

d) Net

e) National

Answers :

1) Answer: e)

As per RBI guidelines, the maturity period of CDs issued by banks should not be less than 7 days and not more than one year, from the date of issue.

2) Answer: a)

The principle of indemnity: Placing the insured, as nearly as possible, in an equal financial position after a loss, as that occupied immediately before the happening of the insured event. This implies that the insured should not be over-compensated; neither makes a profit out of the loss. The principle of Contribution: When a person has one or more insurances done and sufferers loss then he is only liable to be paid to that amount which he has actually suffered loss. The single or multiple insurers will jointly repay him to the extent of loss occurred only. This is known as Principle of contribution. It is corollary to the principle of indemnity.

3) Answer: c)

Banker’s Blanket Bond (BBB) is a type of bond bought by the banks to protect themselves from the criminal acts done by its employees. It is a fidelity bond. This is one condition among many other conditions required for operating a bank.

4) Answer: e)

Insurable interest refers to the interest in the property or thing insured. Only the owner can have the insurable interest in the property. It is related to all types of insurance. In case of life insurance it is related to the life of insured person and in other cases it is related to the subject matter that is insured.

5) Answer: a)

According to the principle of indemnity, the insured person should get back into the position as he was before the damage or loss. In this, the person is repaid the losses. This is not applicable to life insurance.

6) Answer: b)

According to the principle of loss minimisation, it is the duty of the insured to take reasonable care to minimise the loss. The insured person has to make every possible effort to keep the property safe

7) Answer: c)          

IRDAI has asked insurers to enhance capital sum insured in compulsory personal accident cover for owner-driver under motor insurance policies to Rs 15 lakh. The premiums for Rs 15-lakh cover have been fixed at Rs. 750 per annum.

8) Answer: a)

The principle of indemnity: Placing the insured, as nearly as possible, in an equal financial position after a loss, as that occupied immediately before the happening of the insured event. This implies that the insured should not be over-compensated; neither makes a profit out of the loss. The principle of Contribution: When a person has one or more insurances done and sufferers loss then he is only liable to be paid to that amount which he has actually suffered loss. The single or multiple insurers will jointly repay him to the extent of loss occurred only. This is known as Principle of contribution. It is corollary to the principle of indemnity.

9) Answer: c)

Micro Insurance Plan refers to the insurance plan given to the low income households. This is like any other insurance plan but it focuses on low income peoples. Under this the premium paid is very low.

10) Answer: d)

NSFR stands for – Net Stable Funding Ratio * It is defined as the amount of available stable funding (ASF) relative to the amount of required stable funding (RSF). * It promotes resilience over a longer-term time horizon by requiring banks to fund their activities with more stable sources of funding on an ongoing basis. * The above ratio should be equal to at least 100 percent on an ongoing basis.

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