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

Insurance is not gambling because of the presence of

  1. principle of utmost good faith

  2. insurable interest

  3. indemnity principle

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

Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence, without impairment or damage, of the insured object (or in the case of a person, their continued survival). Hence, insurance is not gambling. 

Multiple choice

In which of the following cases is insurable interest not present?

  1. A person insuring his own life

  2. A father taking out a life policy on the life of his son

  3. A person insuring his colleague

  4. An employer taking a life insurance policy on his employees
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For purposes of life insurance, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses and dependents. Employer also has an insurable interest on the life of his employees. Insurable interest is not present in the life of a colleague.

Multiple choice

Which of the following statements is correct?

  1. Higher premium will give the beneficiary higher benefits at the time of claim.

  2. With lower premium in a life insurance policy, higher benefits are available to the beneficiary in a claim.

  3. Higher premium in a life policy will result in lower benefits to the claimant.

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

The higher the premium deposited, the more the benefits at the time of claim.

Multiple choice

Which of the following is NOT true regarding ULIP?

  1. A unit holder can choose between different kinds of funds.

  2. Life insurer provides guarantee for unit values.

  3. Units may be purchased by payment of a single premium or by regular premium payments.

  4. ULIP policy structure is transparent with regards to the insurance expenses component.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

ULIP is a life insurance product which provides risk cover for the policy holder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds.

Multiple choice

A policy with cover for an indefinite term is called

  1. whole life

  2. endowment

  3. money back

  4. term insurance
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Whole life insurance is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid throughout.

Multiple choice

Which of the following actions showcases the principle of “uberrima fides”?

  1. Lying about known medical conditions on an insurance proposal form

  2. Not revealing known material facts on an insurance proposal form

  3. Disclosing known material facts at the time of taking the policy

  4. Paying premium on time
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Uberrima fides is a Latin phrase, meaning "utmost good faith". This means that all the parties to an insurance contract must deal in good faith, making a full declaration of all the material facts in the insurance proposal.

Multiple choice

Which among the following is not a variant of term assurance?

  1. Mortgage redemption insurance

  2. Return of premiums

  3. Increasing term assurance

  4. Endowment assurance
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (on its 'maturity') or on death.

Multiple choice

In this method of underwriting, the underwriter gives rating points for all the negative or adverse factors, totals them and decides extra mortality rating. Which method are we talking about?

  1. Biometric rating

  2. Judgmental rating

  3. Clinical rating

  4. Numerical rating
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In numerical underwriting, underwriters assign positive rating or debit points for all the negative or adverse factors and negative rating or credit points for favorable characteristics of the life being selected. Numerical method of underwriting is widely used for underwriting insurance proposals.

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

Where more than one nominee is nominated,

  1. the death claim monies will be shared

  2. the death claim monies is payable jointly

  3. Both (1) and (2)

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

Where more than one nominee is nominated, the death claim monies is payable jointly.