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

Which of the following statements is/are 'true'?

Statement A: The premium under a group insurance policy is constant for all the time to come. Statement B: Section 45 of the Insurance Act does not apply to a one year policy.

  1. Only (A)

  2. Only (B)

  3. Both (A) and (B)

  4. Neither (A) nor (B)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per Section 45, a policy is not to be called in question on the grounds of misstatement after two years. Hence, statement (B) is false.

Multiple choice

An insurance agent represents a/an

  1. insurance company

  2. sub-agent

  3. co-agent

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

An insurance company is responsible for the acts of its agents and it can be assumed by an insurance applicant that any information or payment of money to the agent will be received by the insurance company.

Multiple choice

An agent can work on which of the following bases for successful results?

  1. Natural market is a source of market for a life insurance agent.

  2. A satisfied client can be an effective referral to an agent for further references.

  3. Family and friends can offer an easy opportunity for being contacted for life insurance selling.

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

All of the above will help an agent to get successful results.

Multiple choice

AML programme of an insurance company includes

  1. internal policies and controls

  2. appointment of a Principal Compliance Officer

  3. internal audit/control

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

AML stands for Anti-Money Laundering, which includes internal policies and controls, appointment of a Principal Compliance Officer and internal control. Hence, option (4) is correct.

Multiple choice

An insurance company needs assets for

  1. financing a new business

  2. generating more competitive returns

  3. greater leverage in investment

  4. All of the above

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

An insurance company needs assets for financing a new business, generating more competitive returns and for greater leverage in investment. Hence, option (4) is the correct answer.

Multiple choice

Which of the following statements is correct?

  1. Insurance is a kind of investment.

  2. Insurance is nothing but a gamble.

  3. Insurance is risk transfer of pooling of similar risks.

  4. Insurance is nothing but a savings scheme.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The pooling principle provides protection against the economic loss arising as a result of one’s untimely death and providing security of investment through pooling and evening out of financial risk as well.

Multiple choice

Insurability of women is governed by

  1. need for insurance

  2. capacity to pay premiums

  3. Both (1) and (2)

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

Insurability of women is governed by need for insurance and capacity to pay premiums. Thus, insurance companies may decide to grant full insurance only to those who have earned income of their own and may impose limits on other categories of women. Similarly, some conditions may be levied on pregnant women.

Multiple choice

Which of the following is not correct with regards to insurable interest?

  1. Father taking out insurance policy on his son

  2. Spouses taking out insurance on one another

  3. Friends taking out insurance on one another

  4. Employer taking out insurance on employees
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Insurable interest is essentially a monetary interest which one should have on the continuing existence of the object of insurance therefore friends taking out insurance on one another is not insurable interest. 

Multiple choice

Which of the following statements is incorrect?

  1. Premium for an MRP as a collateral for a bank loan need not be paid as the bank is expected to pay the same.

  2. Keyman life policy can compensate for losses incurred due to stoppage of work, following the absence of the keyman from work.

  3. Keyman life policy proceeds can be set off against lost income from lost business.

  4. Keyman can provide compensation to protect profits.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Keyman insurance helps a business recover from the loss of its valuable assets viz. the persons who run it and/or own it. Individual talents are becoming critical to the success of many companies and employees are also becoming an important factor in investors' valuation of the entities. Every business has at least a few very valuable employees who contribute significantly to the running and growth of the company.

Multiple choice

Declined life means

  1. a life to which insurance could be granted

  2. a life to which insurance cover could not be granted at affordable cost

  3. Both (1) and (2)

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

Declined life means a life to which insurance cover could not be granted at affordable cost.