LIC AAO 2019 – Insurance Awareness Questions (Day – 05)

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) Selling of insurance product through banks is called?

a) Actuarization

b) Mortization

c) Bancassurance

d) Endowment

e) None of these

2) A person with expertise in field of economics, statistics and mathematics, who helps in risk assessment and estimation of premium rates for insurance business is known as ________

a) Mortality

b) Actuary

c) Annuity

d) Agent

e) None of these

3) ______ is an amount paid periodically to the insurer by the insured for covering his risk by any insurance policy.

a) Mortality

b) Annuity

c) Premium

d) Paid up

e) Donation

4) When all the benefits of an insurance policy gets terminated due to non-payment of premium, then the policy is said to be _____ .

a) Paid up

b) Graced

c) Charged

d) Lapsed

e) Remitted

5) ______ is the amount the policy holder will get from the insurance company if he exits the policy before maturity.

a) Paid up value

b) Surrendered value

c) Annuity Value

d) Lapse Value

e) None of these

6) Which among the following can be used to transfer risk from the investor exposed to the risk to an investor willing to take a risk?

a) Strategic Debt Restructuring

b) Total Return Swap

c) Credit Default Swap

d) Collateralized Debt Obligations

e) Credit Linked Note

7) In the Retirement plans, an investor can claim tax deductions up to ________ per year under Section 80C of the Income Tax Act, 1961.

a) ₹ 50000

b) ₹ 250000

c) ₹ 200000

d) ₹ 100000

e) ₹ 150000

8) The point beyond which the insurer cedes the risk to the reinsurer is called _________.

a) Liability Limit

b) Retention Limit

c) Claim limit

d) Aggregate Limit

e) Yielding Limit

9) ‘With You Always’ is the tagline of which among the following companies?

a) SBI Life Insurance Company Limited

b) Birla Sun Life Insurance Company Limited

c) Aviva India Life Insurance

d) Tata AIG General Insurance Company

e) Max Life Insurance Company Limited

10) The procedure of making an insurance company and the insured agree to settle a claim dispute by a third party is called ___________.

a) Conciliation

b) Mediation

c) Arbitration

d) Negotiation

e) Subrogation

Answers :

1) Answer: c)

Bancassurance is when an insurance company sells its insurance policy through a bank network to the customer of the bank.

2) Answer: b)

Actuary is the term for such a person.

3) Answer: c)

Premium is the amount which the person who has bought the insurance policy (insured) pays to the person/company from which he has bought the insurance policy (insurer) so that the policy continues to pay the benefit.

4) Answer: d)

Policy is said to be lapsed in such a situation.

5) Answer: b)

Surrender value is the amount the policy holder will get from the insurance company if he exits the policy before maturity, but after payment of premium for full 3 years. So if a person has payed premium for 3 years, he can opt out of the policy and get the money proportionally (it will obviously be less than that he would have got at maturity)

6) Answer: c)

Credit Default Swap (CDS) is a credit derivative that can be used to transfer credit risk from the investor exposed to the risk to an investor willing to take a risk. The lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults to swap the risk of default.

7) Answer: e)

An investor can claim tax deductions up to ₹ 150000 per year under Section 80C of the Income Tax Act, 1961. 1/3rd of the accumulated pension can be withdrawn without paying any taxes. Retirement Plan offers the benefits of both investment and insurance cover. In this plan, a person can invest a certain amount regularly to accumulate over a specific tenure in a phase-by-phase manner.

8) Answer: b)

The point beyond which the insurer cedes the risk to the reinsurer is called retention limit. The maximum amount of risk retained by an insurer per life is called retention. Beyond that, the insurer cedes the excess risk to a reinsurer. Aggregate Limit – It is the maximum amount an insurer would pay for covered losses during a policy period. The annual aggregate limit is the total amount an insurer would be paid in a given single year

9) Answer: d)

With You Always is the tagline of Tata AIG General Insurance Company. Tata AIG General Insurance Company Limited is a joint venture between the Tata Group and the American International Group (AIG). It commenced operations in 2001. It is headquartered in Mumbai.

10) Answer: c)

Arbitration is the process of using a third party to settle an insurance dispute between an insurer and a policyholder. Subrogation – It is a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured.This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.