Banking Financial Awareness · General Awareness

Insurance Policies and Claims

1,514 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.

Deductible clausesInsurance perilsTravel insurance coveragePolicy conversion rightsClaim dispute avoidanceSubrogation principles

Insurance Policies and Claims Questions

Multiple choice

When is an insurance company put to real test?

  1. At the point of accepting proposal

  2. At the time of payment of claim

  3. At the time of deciding sum insured

  4. At the time of announcement of bonuses
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An insurance company is put to real test at the time of announcement of bonuses. 

Multiple choice

The first part of the policy document deals with

  1. policy claim settlement procedure

  2. policy schedule

  3. standard provisions

  4. specific policy provisions
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A policy schedule is an outline of the cover provided under the policy. It will show details of the policyholder, what the policyholder does and the cover given, and the relevant limits, sums insured and excess.

Multiple choice

Unit Linked policy scores over Traditional plan with respect to

  1. transparent charges structure

  2. value of the units related to an index of performance

  3. both premium and sum insured (as a multiple of annual premium) decided by the insured

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

All of the above are the benefits of Unit Linked policy over Traditional plan.

Multiple choice

Revival of a policy is not a/an ________ right of the insured.

  1. conditional

  2. unconditional

  3. legal

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

Revival is the process by which a life insurance company puts back into force a policy that has either been terminated because of non-payment of premiums or discontinued under one of the non-forfeiture provisions.

Multiple choice

Which of the following statements in respect of riders is incorrect?

  1. Rider means the basic death cover of a life insurance policy.

  2. Riders can be added through an endorsement.

  3. Riders refer to supplementary benefits in life insurance policies.

  4. Riders help customize individual’s preferences.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Life insurance riders are contingent additional benefits over a primary policy, which come into play in case of a specific eventuality. They offer financial cover over and above basic sum assured in a life insurance policy. Even with the occurrence of the event, the life cover remains intact. This means that even if you have drawn on a particular rider, you remain eligible for the death benefit on the life insurance plan.

Multiple choice

An insurance broker represents

  1. an insurance company

  2. an insured

  3. an association of insurance companies

  4. a community of people who have already taken insurance
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An agent represents the insurance company, whereas a broker represents an insured.

Multiple choice

Distribution of terminal bonuses is a way out for insurance companies to

  1. reward the policyholders for insurance companies’ unrealized gains

  2. achieve equity among different generations of policyholders

  3. Both 1 and 2

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

Distribution of terminal bonuses is a way out for insurance companies to reward the policyholders and achieve equity among different generations of policyholders.

Multiple choice

Which of the following is/are the disadvantage(s) of Traditional With Profit policies over ULIPs?

  1. Bonuses are declared only once a year and do not reflect daily fluctuations in the value of the assets.

  2. Policyholder's benefits depend on assumptions/discretions of the insurance company.

  3. Bonus structure does not reflect the true value of assets of the insurer.

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

All of the above are the benefits given under ULIP.

Multiple choice

In which of the following policies are survival benefits payable?

  1. Whole life

  2. Moneyback

  3. Endowment

  4. Unit linked
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a moneyback plan, the insured person gets a percentage of sum assured at regular intervals, instead of getting the lump sum amount at the end of the term. It is an endowment plan with the benefit of liquidity.

Multiple choice

As per IRDA, all universal life products are known as

  1. ULIPs

  2. variable insurance products

  3. Both 1 and 2

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

Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account which is invested in a number of sub-accounts available in the policy.

Multiple choice

Which of the following is the correct statement?

  1. Life insurance contract is a verbal contract through custom and usage.

  2. Life insurance is a legally enforceable contract between the insurer and the insured, as per the Indian Contract Act, 1872.

  3. Verbal contracts, like life insurance, are enforceable.

  4. Life insurance, like a wagering contract, is a business practice.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per the Indian Contract Act, 1972, life insurance contract is a legally enforceable contract between the insurer and the insured.

Multiple choice

Health plus life combo products would mean a combination of

  1. health insurance from a non-life company and life cover from a life insurance company

  2. health insurance from a standalone health company and life cover from a life insurance company

  3. Both (1) and (2)

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

Health plus life combo products include combination of health insurance from a non-life company and life cover from a life insurance company or health insurance from a standalone health company and life cover from a life insurance company.