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

What is/are the charge(s) in a ULIP?

  1. Policy Allocation Charge

  2. Mortality charge

  3. Both 1 and 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The premium of ULIP is divided into three parts: a) Firstly, there is a policy allocation charge (PAC) which is comprised of agents’ commission, policy setup costs, administrative costs and statutory levies. b) The second component is the mortality charge which is the cost of providing risk cover. c) The balance of premiums after meeting the above two are allocated for the purchase of units. 

Multiple choice

Which of the following statements is/are correct?

A. The sum assured under group insurance is not fixed by the individual member. B. A person whose proposal is declined under individual scheme can get insurance under group policy.

  1. Statement A is correct.

  2. Statement B is correct.

  3. Both statements are correct.

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

If a person's proposal is declined under individual scheme, he cannot get insured even under the group policy. Hence, only statement A is correct.

Multiple choice

Who bears the investment risk in a fixed benefit annuity?

  1. Insurer

  2. Insured

  3. State

  4. Risk pool
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A fixed benefit annuity is where the insurer guarantees a defined amount of monthly annuity benefit for each rupee applied to purchase an annuity. The guarantee implies that the insurer bears the investment risk.

Multiple choice

Which of the following statements is true?

  1. Life insurance policies are contracts of indemnity, while general insurance policies are contracts of assurance.

  2. Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity.

  3. In case of general insurance, the risk event protected against is certain.

  4. The certainty of risk event in case of general insurance increases with time.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Life insurance policies are contracts of assurance, while general insurance policies are contracts of indemnity.

Multiple choice

Which of the following statements is incorrect?

  1. Ombudsman is appointed by the Central Government under powers of the Insurance Act 38 and under Redressal of Public Grievance Rules 1998.

  2. The recommendations of the Ombudsman are always binding on the insured.

  3. The Ombudsman can act as a mediator by mutual agreement between the insurer and the insured.

  4. If mediated, the decision of the Ombudsman is final whether to accept or reject the complaint.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The recommendations of the Ombudsman are not binding on the insured. Hence, option (2) is the incorrect statement.

Multiple choice

State the correct option.

  1. In a policy document, it is now compulsory to indicate the address of the local Ombudsman.

  2. Address of the insured is optional in the policy document.

  3. The address of the IRDA is also necessarily shown in the policy document.

  4. Either the local Ombudsman’s address or that of the IRDA needs to be shown in the policy.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a policy document, it is now compulsory to indicate the address of the local Ombudsman.

Multiple choice

IRDA has prescribed the design and content of a proposal form through

  1. IRDA (Licensing of Agents) Regulations, 2000

  2. IRDA (Protection of Policyholders’ Interests) Regulations, 2002

  3. IRDA (Standard Proposal Form for Insurance) Regulations, 2013

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

IRDA has prescribed the design and content of a proposal form through IRDA (Standard Proposal Form for Insurance) Regulations, 2013.

Multiple choice

A policy taken with critical illness rider benefit is being assigned. Which type of assignment would suit the intended purpose because if the life insured is diagnosed with a critical illness, he only should receive the critical illness rider claim?

  1. Absolute assignment

  2. Conditional assignment

  3. Loan assignment

  4. Collateral assignment
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Conditional assignment would suit the intended purpose because conditional assignment provides that the policy shall revert back to the life assured on his or her surviving the date of maturity or on death of the assignee.

Multiple choice

Which of the following statements is incorrect?

  1. Insurance agent should indicate the scale of commission if asked by the customer.

  2. Insurance agent should share the commission by way of rebate.

  3. Insurance agent should disclose his licence on demand.

  4. Insurance agent should indicate the premium to be charged.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

All the options are correct, except option 3. Sharing commission with a client is illegal.

Multiple choice

Which of the following statements is incorrect in case of variable insurance plans?

  1. Cash value is not guaranteed.

  2. Minimum death benefit is guaranteed in variable insurance plans.

  3. Where to keep the money invested is the decision of the policyholder.

  4. Flexible premium payments are allowed in such policies.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This policy is quite risky because your cash value and death benefit can fluctuate according to the performance of your investment portfolio. Therefore, if your underlying investments perform well, then your cash value and death benefit may increase accordingly. If your investments perform worse than you expected, your cash value and death benefit may decrease.