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 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. 

Multiple choice

It would be advantageous to go for a family floater rather than non-floater due to the reason that

  1. higher cover would help any family member in case of high cost treatment

  2. premiums are considerably lower than where cover is taken for individual members

  3. Both (1) and (2)

  4. Either (1) or (2)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Higher cover and lower premiums are the reasons why it is advantageous to go for a family floater rather than non-floater.

Multiple choice

In a standard insurance policy document, the standard provisions section will have information on which of the following?

  1. Date of commencement, date of maturity and due date of last premium

  2. Name of the nominee

  3. The rights and privileges and other conditions which are applicable under the contract

  4. The signature of the authorized signatory and policy stamp
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In a standard insurance policy document, the standard provisions section will have all the information regarding the rights and privileges and other conditions which are applicable under the contract.

Multiple choice

In which of the following cases does an underwriter need to be very careful?

  1. When sum insured is very small

  2. When sum insured is very large

  3. When income is very small

  4. When income is very high
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An underwriter is an investment bank that helps companies introduce their new securities to the market. In the insurance business, an underwriter is a company liable for insured losses in return for a fee (premium).

Multiple choice

Which of the following statements is correct?

  1. Risk prevention aims at avoidance of loss through insurance.

  2. Chances of risk are reduced by retention of risk.

  3. Loss prevention is nothing but retention of risk.

  4. Chances of occurrence of risk are achieved through transfer of such risks.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Risk prevention aims at avoidance of loss through insurance.

Multiple choice

In traditional life insurance policies, the investment risk is borne by the _____, while in unit linked plans, the investment risk is borne by the _____.

  1. policyholder, unitholder

  2. insurance company, unitholder

  3. insurance company, insurance company

  4. policyholder, insurer
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In traditional life insurance policies, the investment risk is borne by the insurance company, while in unit linked plans, the investment risk is borne by the unitholder.

Multiple choice

Prospecting in an insurance sale is

  1. gathering the names of people who may be interested in insurance

  2. preparing a list of all the persons in a city

  3. enlisting all the policyholders of a branch office

  4. preparing a list of all the agents in a neighborhood
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In insurance sales terminology, prospecting specifically means identifying and gathering potential customers who may be interested in buying insurance. It's the first step in the sales cycle focused on finding leads, not creating exhaustive lists of all people, existing policyholders, or agents.

Multiple choice

Who is primary underwriter or field underwriter?

  1. Development officer

  2. Insured

  3. Agent

  4. Insurer
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Agent is known as primary underwriter. He or she is in the best position to ascertain if the facts being presented are true, since he or she is in the direct contact with the proposed life.