LIC AAO 2019 – Insurance Awareness Questions (Day – 32)

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. LIC AAO 2019 Insurance Awareness Questions questions play an important role in boosting up the score in mains examination and also helps in the interview. Here we are providing a new series of LIC AAO 2019 Insurance Awareness Questions. Aspirants can make use of this LIC AAO 2019 Insurance Awareness Questions, to improve score in the Insurance & Financial Market Awareness section.

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1) Which of the following is the amount which the insurance company has to pay before any bonuses are added?

a) Sum assured

b) Compensation

c) Maturity value

d) Annuity

e) None of the above

2) Which of the principle state that the insured should not collect more than the actual cash of a loss?

a) Indemnity

b) Premium

c) Subrogation

d) Loss minimization

e) Utmost good faith

3) The insurance companies collect a fixed amount from its customers at a fixed interval of time. What is it called?

a) Instalment

b) Contribution

c) Premium

d) EMI

e) None of these

4) Under which section of insurance regulatory act 1938, the merger of an insurance company and a non-insurance firm is not allowed?

a) Section 35

b) Section 21

c) Section 8

d) Section 91

e) Section 24

5) Which of the following was India’s first private sector housing finance company?

a) LICHFL

b) State Bank of India Home Finance

c) Housing Development Finance Corporation

d) Housing Urban Development Corporation

e) IDBI Home finance Limited

6) The phrase “Stepping into shoes of other” describes which of the following principles-

a) Principle of CausaProxima

b) Principle of Subrogation

c) Principle of Contribution

d) Principle of Indemnity

e) None of These

7) 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

8) 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

9) The IRDA was incorporated as a statutory body in ________

a) July 1972

b) June 1991

c) April 2000

d) August 2003

e) September 2004

10) 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 of these

Answers:

1) Answer: a)

The sum assured is the amount of money an insurance policy guarantees to pay up before any bonuses are added. In other words, sum assured is the guaranteed amount the policyholder will receive. This is also known as the cover or the coverage amount and is the total amount for which an individual is insured.

2) Answer: a)

It’s the principle of indemnity which states that a loss payment will replace what is lost, putting the insured back to where it was financially prior to the loss without rewarding or penalizing the insured for its loss.

3) Answer: c)

The insurance companies collect a fixed amount from its customers at a fixed interval of time, It is called “Premium”.

4) Answer: a)        

Section 35 of the Insurance Act, 1938 does not allow a merger of an insurance firm with a non—insurance firm. The provision says that an entity not in the business of insurance, cannot be merged with an insurance entity.

5) Answer: c)             

Housing Development Finance Corporation (HDFC) was the India’s first private sector housing finance company came into existence in 1977.

6) Answer: b)          

Principle of Subrogation involve Stepping into shoes of other at involves the insured to claim the amount from the third party responsible for the loss by allowing the insurer to pursue legal methods to recover the amount of loss, For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as claim.

7) 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.

8) 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.

9) Answer: c)

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April 2000

10) 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.

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