LIC AAO 2019 – Insurance Awareness Questions (Day – 03)

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) IRDAI has announced that it will adopt RBC regime from the current solvency principle to improve protection for policyholders. What is the full form of RBC?

a) Risk Based Capacity

b) Repo Based Capital

c) Rating Based Capital

d) Risk Based Capital

e) Regressive Tax based Capacity

2) ________ is a savings linked insurance policy with a specific maturity date.

a) Unit Linked Policy

b) Endowment Policy

c) Third Party Policy

d) Re-insurance Policy

e) None of these

3) “G” in ‘DICGC’ stands for which of the following term?

a) Growth

b) GDP

c) Government

d) Gilts

e) Guarantee

4) “National Insurance Academy” is located in which city of India?

a) Mumbai

b) New Delhi

c) Chennai

d) Chandigarh

  • e) Pune

5) When a contract ceases to be enforceable at law, then it is called as

a) Legal Contract

b) Void contract

c) Life contract

d) Voidable contract

e) None of these

6) As per the regulations of IRDAI, which insurance policy cannot be declined to underwrite the policy?

a) Term Insurance Policy

b) Unit Linked Insurance Policy

c) Third Party Insurance Policy

d) Valued Insurance Policy

e) Whole Life Insurance Policy

7) On what basis, the policy administration charge is levied in the Unit Linked Insurance Plan?

a) Monthly Basis

b) Daily Basis

c) Yearly Basis

d) Quarterly Basis

e) Half Yearly Basis

8) The profits allocated to each life insurance participating policy are paid in the form of __________.

a) Interim Bonus

b) Cash Bonus

c) Reversionary Bonus

d) Terminal Bonus

e) Pay-out Bonus

9) A professional dealing with the assessment and management of risk for insurance policies is known as

a) Assignor

b) Insurer

c) Actuary

d) Administrators

e) None of these

10) What is ULIP?

a) Unity-liked insurance plans

b) Unit-linked insurance policy

c) Unit-linked insurance plans

d) Universal-linked insurance plans

e) None of these

Answers :

1) Answer: d)

Insurance regulator IRDAI has announced that it is in the process of moving towards the Risk-Based Capital (RBC) regime to improve protection for policyholders. The decision to move to the RBC structure from the current solvency principle regime was taken after recommendations of a panel which gave its report.

2) Answer: b)

An Endowment Policy is a savings linked insurance policy with a specific maturity date. if an unfortunate event by way of death or disability occur to you during the period, the Sum Assured will be paid to your beneficiaries. On your surviving the term, the maturity proceeds on the policy become payable.

3) Answer: e)

G in “DICGC” stands for – Guarantee (Deposit Insurance and Credit Guarantee Corporation). Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of Reserve Bank of India. It was established on 15 July 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities.

4) Answer: e)

The National Insurance Academy (NIA) is situated in Pune, India. It was founded in 1980 by the Finance Department of the Indian government with capital patronage from LIC and public sector general insurance industry.

5) Answer: b)

The law relating to contracts in India is governed by The Indian Contract Act , 187B.  A void contract is a contract which ceases to be enforceable by law.

6) Answer: c)

As per the IRDAI, no insurer can decline to underwrite third party insurance. Third Party Insurance Policy covers the third person who has been injured in an accident involving the owner and his/her car. It doesn’t provide direct benefit to the insured. This is a mandatory cover, along with the own damage cover, that a vehicle owner must purchase. This insurance cover is for any collateral damage to a third party.

7) Answer: a)
Policy Administration Charge is a fee levied for the administration of the policy and is charged on monthly basis by the cancellation of units from all the funds chosen. This could be flat throughout the policy term or vary at a pre-determined rate

8) Answer: c)

The profits allocated to each participating policy are paid in the form of a Reversionary Bonus. A reversionary bonus adds value to the total amount payable to the policyholder or nominee. A reversionary bonus is usually declared at the end of every financial year and it is payable at the time of a claim.

9) Answer: c)

An actuary is a professional dealing with the assessment and management of risk for financial investments, insurance policies, and any other ventures involving a measure of uncertainty.

10) Answer: c)

A ULIP or unit linked insurance plan is a market-linked product that aggregates the very best of investment and insurance. It is a plan which is linked to the capital market and offers flexibility to invest in equity or debt funds as per risk appetite.


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