Banking Financial Awareness · General Awareness

Insurance Policies and Claims

1,580 Questions

Insurance policies provide financial protection against specific perils, involving concepts like deductibles, premiums, and claim settlements. Banking and insurance aspirants need a solid grasp of policy types, coverage limits, and claim procedures. Practice these questions to understand how different insurance principles apply in real scenarios.

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Insurance Policies and Claims Questions

Multiple choice

Which of the following statements is incorrect?

  1. An agent licenced to act as such for an insurer is required to have a licence under Section 42 of the Insurance Act, 1938 for procuring and continuing insurance business against payment of commission by the insurer.

  2. An agent can only be a trained individual for working for an insurance company.

  3. A bank can also act as a broker for life insurance business.

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An agent licenced to act as such for an insurer is required to have a licence under Section 42 of the Insurance Act, 1938 for procuring and continuing insurance business against payment of commission by the insurer. Banks can now act as brokers for life insurance businesses. It is not mandatory for an individual to be a trained person to work for an insurance company. Hence, option (2) is the correct answer.

Multiple choice

Which of the following is the most appropriate explanation for the fact that young people are charged lesser life insurance premium as compared to old people?

  1. Young people are mostly dependent.

  2. Old people can afford to pay more.

  3. Mortality is related to age.

  4. Mortality is inversely related to age.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Mortality is related to age and hence, young people who are less likely to die are charged lower premiums as compared to old people.

Multiple choice

Identify the correct option(s).

  1. Revival of a lapsed policy is subject to certain conditions as set out by the underwriter.

  2. Revival of a lapsed policy cannot increase the risk for the insurer.

  3. Fresh medical examination report is not always required for revival of a lapsed policy.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All the given statements are correct.

Multiple choice

_______ may deal with more than one life insurance company or general insurance company or both.

  1. An agent

  2. A surveyor

  3. A composite agent

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A composite insurance agent means an individual who is appointed as an insurance agent by two or more insurers, subject to the condition that he/she shall not act as insurance agent for more than one life insurer, one general insurer, one health insurer and one of each of the mono-line insurers.

Multiple choice

Which of the following statements is correct?

  1. The policy document has to be signed by a competent authority, but need not be compulsorily stamped according to the Indian Stamp Act.

  2. The policy document has to be signed by a competent authority and should be stamped according to the Indian Stamp Act.

  3. The policy document need not be signed by a competent authority, but should be stamped according to the Indian Stamp Act.

  4. The policy document neither needs to be signed by a competent authority nor it needs to be compulsorily stamped according to the Indian Stamp Act.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the Indian Stamp Act, the policy document has to be signed by a competent authority as well as stamped. Hence, option (2) is correct.

Multiple choice

Which of the following statements is correct?

  1. Policyholder cannot earn market rate of interest on his cash value.

  2. In universal life plan, policyholder can vary payments of premium.

  3. Universal life plan is a traditional plan of assurance.

  4. Variable life insurance is a temporary plan of insurance.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Universal life can provide you with a variety of different payment options, including a flexibility of changing your death benefits, as well as the potential to accumulate cash value over time. Hence, option (2) is correct.

Multiple choice

What is/are the special feature(s) of a family floater policy?

  1. The total sum insured floats amongst the family members.

  2. Husband/wife, children and parents/parents-in-law can be covered.

  3. Both (1) and (2)

  4. None of these

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A family floater health insurance plan is an insurance plan that is tailor-made for families. It is quite similar to the individual health plan with an add-on benefit of providing health coverage for the entire family.

Multiple choice

Risk transfer means

  1. insuring with an insurance company

  2. insuring with another individual

  3. insuring with the owner of the company

  4. risk retention
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Risk transfer involves transferring the responsibility for losses to another party (which is insurance company in this case). Here, the losses that may arise as a result of a fortuitous event (or peril) are transferred to another entity. 

Multiple choice

What is the meaning of the term non-medical underwriting?

  1. Taking health insurance

  2. Buying a medical insurance without medical exam

  3. Buying a life insurance without medical exam

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Insurance companies are coming up with some medical policies where the proposer is not required to undergo any medical examination. In such cases, companies usually create a ‘medical grid’ to indicate at what age and stage should a medical underwriting be done and therefore, these non-medical limits are carefully designed so as to strike a proper balance between business and risk.

Multiple choice

In a money back plan, what is the maturity claim payable?

  1. Sum insured

  2. Sum insured less survival benefits paid already

  3. Bonuses

  4. Nothing is payable.

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Money back plan is typically an endowment plan with the provision for return of a part of the sum assured in periodic installments during the term and balance of sum assured at the end of the term.