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

In September 2016, the Indian Railways launched an insurance scheme for passengers travelling ________.

  1. in AC first class

  2. in AC 2 Tier

  3. in AC 3 Tier

  4. on e- ticket

  5. in sleeper class
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Indian Railways travel insurance scheme launched in September 2016 was automatically available to passengers booking e-tickets across all classes with very low premiums (up to 92 paise). It wasn't restricted to specific travel classes but to the booking method.

Multiple choice

Match all the correct insurance policies with their respective parent companies.

   
List- I
List - II
(a)
HDFC
(i) Smart
(b)
AVIVA
(ii) Youngstar
(c)
Ing Vysya
(iii) Life bond
(d)
Met life
(iv) Freedom plan

  1. (a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)

  2. (a) - (iii), (b) - (ii), (c) - (iv), (d) - (i)

  3. (a) - (i), (b) - (ii), (c) - (iii), (d) - (iv)

  4. (a) - (ii), (d) - (i), (b) - (iv), (c) - (iii)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

HDFC Life offers Youngstar insurance plan, making (a)-(ii) correct. AVIVA provides Life bond plan, so (b)-(iii) is accurate. ING Vysya's Freedom plan makes (c)-(iv) correct. Met Life's Smart plan completes the matching as (d)-(i). Option A correctly matches all four insurance providers with their respective policy names.

Multiple choice

Directions: Choose the correct option for the given question.

Which of the following schedules will be written in revenue account of an insurance company?

  1. Schedule 10-14

  2. Schedule 5-8

  3. Schedule 1-4

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

Insurance companies prepare Revenue Accounts with 14 schedules following IRDA regulations. Schedules 1-4 relate to technical revenue items: Schedule 1 (Premium), Schedule 2 (Claims), Schedule 3 (Commission), and Schedule 4 (Operating Expenses). These schedules form the Revenue Account which shows the underwriting result. Schedules 5-8 relate to investment income, non-operating items, and profit/loss. Schedules 10-14 contain additional disclosures and supplementary information. Therefore, Schedules 1-4 are written in the Revenue Account.

Multiple choice

Transfer of actionable claim has exception under Section130 Transfer of Property Act.

  1. It does not apply to transfer of life insurance policy.

  2. It does not apply to the transfer of marine or fire policy.

  3. It does not apply to vehicle insurance policy.

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

Exception of Section 130 of Transfer of property Act, 1882, nothing in this section applies to the transfer of a marine or fire policy of insurance or affects the provisions of Section 38 of the Insurance Act, 1938.

Multiple choice

Insurance prepaid will be a

  1. current liability

  2. current asset

  3. fixed asset

  4. contingent liability

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

Correct; insurance prepaid is the amount paid before. Hence, it is an asset.

Multiple choice

Directions: For this question, select the best of the answer choices given.

In 1960, 10 percent of every dollar paid in automobile insurance premiums went to pay costs arising from injuries incurred in car accidents. In 1990, 50 percent of every dollar paid in automobile insurance premiums went toward such costs, despite the fact that cars were much safer in 1990 than in 1960. Which of the following, if true, best explains the discrepancy outlined above?

  1. There were fewer accidents in 1990 than in 1960.

  2. On average, people drove more slowly in 1990 than in 1960.

  3. Cars grew increasingly more expensive to repair over the period in question.

  4. The price of insurance increased more rapidly than the rate of inflation between 1960 and 1990.

  5. Health-care costs rose sharply between 1960 and 1990.
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

E is correct because if healthcare costs rose sharply between 1960 and 1990, this would explain why a much larger percentage of insurance premiums went toward injury costs in 1990 - even if cars were safer, the medical treatment for those injuries cost much more. A would make the discrepancy harder to explain - fewer accidents should mean lower costs, not higher. B doesn't explain why costs rose as a percentage of premiums. C discusses repair costs, not injury costs, so it is irrelevant. D discusses insurance prices generally, not specifically injury-related costs, so it doesn't explain the shift.

Multiple choice

Directions: For this question, select the best of the answer choices given.

Home insurance premiums are typically set after an appraiser assigns an official assessed value. Reassessments should be frequent in order to remove distortions that arise when property value changes at differential rates. In actual fact, however, properties are reassessed only when they stand to benefit the insurance company. In other words, a reassessment takes place when the most likely outcome is in increase in insurance premiums to the homeowner. Which of the following, if true, describes a situation in which a reassessment should occur but in unlikely to do so?

  1. Property values have risen sharply and uniformly.

  2. Property values have risen everywhere - some very sharply, some moderately.

  3. Property values have on the whole risen sharply; yet some have dropped slightly.

  4. Property values have on the whole dropped significantly; yet some have risen slightly.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The best answer is (4). Distortions occur when property values change at differential rates. If most property values have dropped significantly, but some have risen slightly, a reassessment should occur but is unlikely to do so since it will not benefit the insurance companies.

Multiple choice

Which of the following is not an actionable claim?

  1. A claim to mesne profits

  2. A claim for arrears of rent

  3. A claim for return of earnest money

  4. A claim to money under insurance policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Actionable claim is a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property. 

Multiple choice

Directions: Choose the correct option for the given question:

Life insurance is a contract of which of the following?

  1. Indemnity

  2. Guarantee

  3. Contribution

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

Life insurance is fundamentally a contract of guarantee, not indemnity. Unlike property insurance which aims to restore the insured to their original financial position (indemnity), life insurance guarantees a predetermined sum upon death/maturity. The insured's life cannot be valued in monetary terms, so indemnity principle doesn't apply. Contribution and subrogation are principles applicable to indemnity contracts, not life insurance.

Multiple choice

Directions: Choose the correct option for the given question.

Under which principle, all the rights of an insured are transferred to insurance company after making payment of claim?

  1. Subrogation

  2. Utmost good faith

  3. Contribution

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

The principle of subrogation allows an insurance company to step into the insured's shoes after paying a claim. This means the insurer acquires all legal rights the insured had against third parties responsible for the loss, and can recover costs from them. For example, if your car is damaged by another driver and your insurer pays you, they can then pursue the at-fault driver for reimbursement.

Multiple choice

Prepaid Insurance paid for the current year is

  1. an asset

  2. a liability

  3. an expense

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 It is an asset since it is paid in advance for the next year. It is deducted from the total insurance paid in the debit side of Profit & Loss and shown in assets side of Balance Sheet.

Multiple choice

Every motor vehicle must be insured because

  1. it compensates against the damages to the vehicle in an accident

  2. it fulfills the needs of the Motor Vehicle Act

  3. it compensates life, property, damages in an accident and also theft

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

Correct option is (3).

Multiple choice

What is insurance rate?

  1. Rate of interest which insurer pays to an insured person/company based on the total premium paid.

  2. Factor used to determine the amount called the premium, to be charged for a certain amount of insurance coverage.

  3. The number of claims made during a period of time.

  4. The number of claims made by a person during his term of insurance.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An insurance rate is the numerical factor used to calculate the premium for a specific amount of insurance coverage. It is determined by actuaries based on the probability of loss and the cost of claims. The premium is the final amount the policyholder pays, derived from this rate.