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 is correct?

  1. Extra benefits are allowed by the insurer in a life policy on payment of an extra premium.

  2. Double accident benefit is a free item in a life policy.

  3. Permanent Disability, like DAB, is also a free benefit and not chargeable.

  4. Extra premium for health and extra premium for extra benefits are identical.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Extra benefits are allowed by the insurer in a life policy on payment of an extra premium and extra premium for health is different from extra premium for extra benefits. Double accident benefits and Permanent Disability benefits are available on payment of extra premium. 

Multiple choice

When is it essential for insurable interest to be present in case of life insurance?

  1. At the time of taking out insurance

  2. At the time of claim

  3. Either (1) or (2)

  4. Insurable interest is not required in case of life insurance.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Insurable interest is essentially a monetary interest which one should have on the continuing existence of the object of insurance. So, it is important for it to be there at the time of taking out insurance.

Multiple choice

Identify the incorrect statement.

  1. A policy has three parts viz. policy schedule, standard provisions and special policy provisions.

  2. A policy is the most important document evidencing the relationship between the life assured and the insurance company.

  3. With the issue of FPR, further premiums are not required to be paid.

  4. Any interpretation of a complex provision of the policy, in case of a conflict, should be in favour of the assured.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

With the issue of Family Present Rider, further premiums are required to be paid. Hence, option (2) is incorrect.

Multiple choice

Which of the following is untrue as per IRDA’s regulations on non-par policies?

  1. The benefits shall be stated at the outset.

  2. The benefits shall be linked to some index.

  3. The additional benefit under these policies shall be laid out at the outset.

  4. The return shall be stated at the beginning of the contract itself.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The benefits of an insurance policy are not linked to any index. Hence, option (2) is the correct answer.

Multiple choice

In relation to annuities, what does “liquidation period” refer to?

  1. Period between the purchase of annuity and commencement of payments

  2. Period during which the insurer makes annuity payments

  3. Time taken to build up the corpus

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

“Liquidation period” refers to the period during which insurer makes annuity payments.

Multiple choice

Reversionary bonus is declared as an amount

  1. per thousand premium paid

  2. per thousand surplus of the company

  3. per hundred premium paid

  4. per thousand sum insured
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Reversionary bonus is the bonus declared every year as a percentage of (Guaranteed Maturity Benefit/Sum Assured + Earlier Reversionary Bonuses). It is payable on the death of life assured or maturity of the policy.

Multiple choice

The main advantage of term insurance lies in

  1. protection

  2. thrift

  3. savings

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

The main advantage of term insurance is price because with term insurance, you are generally just paying for the death benefit. If you die during the term of the policy, the lump sum payment will be received by your beneficiaries.

Multiple choice

Surplus would arise in an insurance company, if

  1. the actual experience is worse than what it had assumed

  2. the actual experience is better than what it had assumed

  3. the liabilities are under/over valued

  4. the assets are valued in a conservative manner
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When the actual experience of an insurance company is better than what it had assumed, the result would be surplus (profit) for the company.

Multiple choice

If a policy document is lost, then

  1. claim may be settled on the basis of an indemnity bond

  2. an advertisement may have to be placed in a newspaper if the amount to be paid is high

  3. Both (1) and (2)

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

If a policy document is lost, claim may be settled on the basis of an indemnity bond and an advertisement may have to be placed in a newspaper if the amount to be paid is high.

Multiple choice

Revival of a life insurance policy means

  1. forcing a policy to lapse

  2. reinstating a lapsed policy

  3. not paying the premiums

  4. non-settlement of claim monies
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Reinstatement or 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 has been continued under one of the non-forfeiture provisions.

Multiple choice

Benefit under a Unit Linked policy is reckoned by

  1. the value of the units

  2. the number of units standing to the credit of the unit holder

  3. Both (1) and (2)

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

Benefit under a Unit Linked policy is reckoned by the value of the units and the number of units standing to the credit of the unit holder.