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

Under the ________ policy, the insurer undertakes to pay the assured a specified sum on the attainment of a particular age or on his death, whichever is earlier.

  1. whole life

  2. endowment life assurance

  3. joint life

  4. annuity

  5. children's endowment

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

This is correct. Under the endowment life assurance policy the insurer undertakes to pay the assured a specified sum on the attainment of a particular age or on his death, whichever is earlier.

 
 

Multiple choice

Reinsurance is

  1. a contract of insurance that is taken up by the insured from the same insurer after the previous insurance policy lapses

  2. a contract of insurance which is taken to cover several risks on the same property such as fire insurance or burglary insurance by separate insurers on the same property

  3. a contract of insurance in which the insurer enters into a contract with another insurer to insure the whole or part of risk covered by first insurer

  4. a contract of insurance where more than one policy is taken to cover the same risk

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

This is correct as this is reinsurance.

Multiple choice

Directions: Choose the correct option for the given question.

In fire insurance, insurable interest must be present

  1. both at the time of insurance and at the time of loss of the subject-matter.

  2. at the time of loss of the subject-matter.

  3. at the time of effecting insurance.

  4. at the time of receiving the payment.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In fire insurance, the principle of insurable interest dictates that the insured must have a financial interest in the property at the time of the policy inception and at the time of the loss.

Multiple choice

To address customer grievances in respect of insurance contract on personal lives, there is an institution called _______.

  1. Insurance <font size="2">O</font>mbudsman

  2. Insurance <font size="2">R</font>egulator

  3. Insurance Intermediary

  4. Insurance Regulatory and <font size="2">D</font>evelopment Authority
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances. 

Multiple choice commercial studies finance and accounts meaning and functions of finance and accounts department nature, need and significance of business finance introduction to business capital/finance

To guard against the dangers of excess payment arising out of double insurance or over insurance made by the insured, insurance companies provide in their agreement _________________.

  1. Average clause

  2. Subrogation clause

  3. Risk clause

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

The principle of indemnity ensures that an insured party is compensated only for the actual loss suffered, preventing them from profiting from an insurance claim. This prevents the dangers of over-insurance or double insurance.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

An assessee has paid life insurance premium of Rs. 25, 000 during the previous year for a policy of Rs. 1, 00, 000. He shall __________________________.

  1. Not be allowed deduction u/s 80C

  2. Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs. 20, 000

  3. Be allowed Deduction for the entire premium as per the provisions of section 80C

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

Under Section 80C of the Income Tax Act, the deduction for life insurance premium is limited to 10% of the capital sum assured for policies issued after April 1, 2012. Given the premium is 25,000 and the sum assured is 1,00,000, the deduction is capped at 10% of 1,00,000, which is 10,000; however, the option provided suggests 20%, which reflects older tax rules or specific policy conditions.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

'Salvage Charges' is related to ________________.

  1. Life Insurance

  2. Marine Insurance

  3. Fire Insurance

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

Salvage charges refer to the compensation paid to a third party who saves a ship or its cargo from peril at sea. This is a fundamental concept in marine insurance.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

In order to reduce the risk of heavy insurance the insurer passes on some business to the other company, it is called _______________.

  1. Reinsurance

  2. Double Insurance

  3. Joint Insurance Policy

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

Reinsurance is the practice where an insurer transfers a portion of their risk to another insurance company to mitigate the potential impact of large claims.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

State the following statement is True or False:
All insurance contracts are contracts of indemnity, except the contract of life insurance.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. The principle of indemnity in an insurance contract safeguards the insured to put him in the same position that he/she would have been in if the loss had not occurred. However, the principle of indemnity does not apply to life insurance contracts.

Thus it can be said that all contracts of insurance, except that of life insurance, are contracts of indemnity.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

State the following statement is True or False:
Insurance means protection against possible risk of loss.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for a consideration. The principle of indemnity in an insurance contract safeguards the insured to put him in the same position that he/she would have been in if the loss had not occurred. However, the principle of indemnity does not apply to life insurance contracts. Thus insurance is a protection against possible risk of loss.