LIC AAO Insurance Awareness Questions 2019 (Day – 58)

Dear Aspirants, LIC AAO is one of 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. LIC AAO Insurance Awareness & Financial Market Awareness section comprises of 30 questions. LIC AAO Insurance Awareness Questions 2019 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 Insurance Awareness Questions 2019. Aspirants can make use of this LIC AAO Insurance Awareness Questions 2019, to improve score in the Insurance & Financial Market Awareness section.

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1) A form of insurance that pays damages equal to the replacement value of damaged property minus depreciation is known by which of the following term?

a) Survival Benefit

b) Actual Cash Value

c) Surrender Value

d) Sub standard Value

e) Limited Payment Value

2) What do you understand by term ‘Riders’ used in Insurance sector?

a) Third Party insurance benefits

b) Co-insurance compulsory benefits

c) Reinsurance conditions

d) Conditions by regulator on insurer

e) Optional add-on benefit linked with policy

3) What does “Reinsurance” mean?

a) Taking insurance by person from multiple insurance companies

b) Double insurance taken by an entity or person

c) Insurance for insurance companies

d) Term insurance taken by a person

e) Life time insurance taken by a person

4) Which term is used for options given to policyholders of ULIPs to move their investments from one fund to another within one plan?

a) Transfer Pricings

b) Trade Options

c) Switches

d) Unit Payments

e) Dual Payments

5) What do you understand by term ‘Premium Allocation Charge’s’ used in insurance sector?

a) Third-party insurance charge

b) Charge levied by insurance firms to recover the initial expense

c) CESS levied by union government

d) Commission charged by the Policy agent

e) Surcharge appropriated by union government

6) What is the name of new micro insurance plan launched by ‘Life Insurance Corporation (LIC)’ recently?

a) Suvidha Bachat

b) Micro Bachat

c) Jeevan Bachat

d) Jeevan Anand

e) None of these

7) What is a term for entities which pool money to purchase securities, real property, and other investment assets or originate loans?

a) External investor

b) Institutional investor

c) Co-operative investor

d) Internal investor

e) None of these

8) Any insurance risk resulting from a human decision is called _____

a) Partial Risk

b) Static Risk

c) Dynamic Risk

d) Pure Risk

e) None of these

9) 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

10) Loan under policy should not exceed which of the following?

a) Surrender Value

b) Sum Assured

c) Total premium paid

d) Bonus

e) None of them

Answers :

1) Answer: B)

In the property and casualty insurance industry, Actual Cash Value (ACV) is a method of valuing insured property, or the value computed by that method. Actual Cash Value (ACV) is not equal to replacement cost value (RCV). ACV is computed by subtracting depreciation from replacement cost.

2) Answer: e)

‘Riders’ in a financial context actually means an optional insurance linked benefit, purchased separately at an additional premium. Riders help the insured customize the policy to fit his or her specific needs.

3) Answer: c)

Reinsurance is insurance that is purchased by an insurance company. The purpose of reinsurance is for a company to avoid having too large a risk or concentration of risks, within the company.

4) Answer: c)

Switches are options given to policyholders of ULIPs to move their investments from one fund to another, within one plan. You can transfer units fully or partially between fund options — equity, debt and equity to debt.

5) Answer: b)

Every time you take up a insurance plan, the insurance company spends some amount of money on distributor fee, underwriting expenses of the policy as well as medical expenses. Premium allocation charges are levied as a certain percentage of the premium to offset for all such expenses. Premium allocation charges are deducted upfront and the remaining money gets invested in the chosen fund.

6) Answer: b)

In February, 2019, a new micro insurance plan ‘Micro Bachat’ was launched by the Life Insurance Corporation (LIC) of India. It provides coverage of up to 2 lakhs and is the first micro-insurance plan to do so. It provides both protection and savings and is a regular premium, non-linked, participating endowment micro insurance plan. In case a policyholder dies, this plan would provide financial assistance to the family. For surviving policyholders, a lump sum amount at the time of maturity shall be provided it can be availed only by standard healthy citizens in the age group of 18-55 years without undergoing any medical examination.

7) Answer: b)

An Institutional investor is a term for entities which pool money to purchase securities, real property, and other investment assets or originate loans. There are usually six types of institutional investors: endowment funds, commercial banks, mutual funds, hedge funds, pension funds and insurance companies.  It trades in large amounts or in dollar amount of securities, which qualifies for preferential treatment and low commission.

8) Answer: c)

Integral part of a speculative decision where only three alternatives are possible: gain, loss, or break even. Dynamic risks are not insurable.

9) 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.

10) Answer: a)

The cash surrender value is the sum of money an insurance company pays to the policyholder or annuity holder in the event his policy is voluntarily terminated before its maturity or the insured event occurs. It is also known as “cash value,” “surrender value” and “policyholder’s equity.”

 

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